Uncategorized – Page 72 – The Global Carbon Fund

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

November 10, 2023/in Uncategorized /by

Canada’s NDP Leader Jagmeet Singh advanced a motion in the House of Commons, keeping the carbon pricing debate alive by urging Prime Minister Justin Trudeau to permanently remove the GST (Federal Goods and Services Tax) from all forms of home heating.

Meanwhile, concerns were also raised about missing Canada’s emission reductions target as revealed by a recent audit. The debate between the two parties on carving-out the carbon tax seems to impact the nation in reaching its climate goals.

A ‘Flip-Flop’ Stance

NDP’s move, focused on affordability, aligns with the New Democrats’ ongoing advocacy but has gained renewed attention. That is due to the recent controversies surrounding the Liberals’ exemptions for home heating oil and rural rebate enhancements.

Singh’s proposal is non-binding, meaning it won’t compel the government to act even if it passes. It aims to achieve three major objectives:

Remove the GST from all home heating forms,
Ensure easy access to eco-energy retrofits and heat pumps for low-income and middle-class Canadians
Fund these initiatives through a tax on the excess profits of major oil and gas corporations.

The motion was debated with the vote expected later in the week.

Despite the NDP’s support for the Conservative carbon tax motion, there’s uncertainty about the reciprocity of support from the Conservative caucus for the NDP’s current motion.

During the House debate, Conservative Leader Pierre Poilievre criticized the NDP for “yet another flip-flop” in their stance on the tax issue.

Singh responded by challenging the corporate-controlled Conservatives to support the motion. He further highlighted their priorities in protecting big oil and gas profits over helping Canadians lower their costs and combat the climate crisis.

The Liberals have consistently advocated for carbon pricing based on its universal application. The purpose of the tax is to discourage planet-warming emissions by making them more costly to bear. This policy would allow Canadians only to pay based on how much carbon they’re releasing into the air.

The current administration, for example, charges $65/tonne of CO2. That translates to 14 cents for each liter of gasoline, 10 cents for propane, and $145/tonne of high-grade coal.

‘Ax The Tax’

The tax exemption, a.k.a. ‘carve-out’, further complicated the Liberals’ established stance that any inequalities resulting from the tax could be corrected with targeted rebates.

The concept means that all Canadians would face the same fuel prices. However, those with lower incomes or residing in rural areas without public transportation would receive a proportionately larger portion of the refund.

With the exemption, the Liberals provided a pardon for an exceptionally polluting fossil fuel that could predominantly benefit the wealthy. That’s according to the findings of an economist, noting that it would favour “households with large houses MORE than low-income households living in higher density homes”.

As for the Conservatives, abolishing the tax is one of their major lobbies. The party has mentioned the never-heard-of phrase in over 150 years in the House of Commons’ transcripts – ‘ax the tax’ – more than 100 times.

Meanwhile, the Senate also advanced Bill C-234, suggesting further exemptions in the carbon price for specific fuels used in farming. The bill, if passed, would create exemptions for natural gas and propane as qualifying farming fuels from the carbon tax.

Sen. Pat Duncan particularly noted by asking that:

“Will allowing this rebate and passing Bill C-234 make a tremendous difference to Canada reaching the climate change goals?”

That question points to another significant result of the federal environment commissioner’s recent audit. That is Canada’s plan to achieve its 2030 greenhouse gas emissions targets falls short of the mark.

Missing The Target

Canada’s emission reductions plan, published last year, is a requirement under the federal net zero accountability law passed in 2021. The following chart shows Canada’s 2030 Emissions Reduction Plan per sector.

According to the audit, while the plan represents an improvement over previous versions, it still lacks in critical areas. Key policies have experienced delays, the functionality of established measures remains unclear, and the country is several million tonnes away from its emissions goal.

The auditor, Jerry DeMarco, emphasized the urgency of reversing Canada’s GHG emission trajectory, stressing that the issue demands immediate attention.

The nation aims to reduce emissions by 40% – 45% from 2005 levels by 2030. That calls for a ⅓ reduction in Canada’s current emissions by the same period.

However, the measures outlined in the plan are projected to achieve just a quarter of the reduction by decade’s end. That happens due to relying on government modelling which DeMarco referred to as “overly optimistic assumptions”.

Though the plan identifies more than 80 policies and programs, less than 50% have set timelines for implementation. In fact, only 4 of them have specific targets for emissions reduction.

In comparison with other G7 nations, Canada’s emissions have only decreased by around 8% compared to 2005 levels. As such, the country is the least successful in cutting emissions within the group.

In response to the findings, Environment Minister Steven Guilbeault acknowledged the existing gap between the target and necessary policy actions. He pledged the government’s commitment to accelerating efforts and improving transparency in its modelling to show how it intends to achieve the 2030 target.

Guilbeault also hinted at positive developments in the upcoming progress report due before the year’s end.

The NDP’s motion to scrape the tax from home heating intensifies the debate on carbon pricing and emission reductions in Canada, underscoring the challenges faced in meeting the nation’s climate goals.

The post Canada Faces 2 Carbon Issues: Shaky Carbon Tax and Missed Emissions Goal appeared first on Carbon Credits.

Market-Based Vs Location-Based Emissions: What’s The Difference?

November 9, 2023/in Uncategorized /by

The calculation of emissions, particularly in the realm of energy consumption, is a complex process that requires careful consideration of various factors. Two primary methods, location-based and market-based emissions reporting, play a critical role in understanding your company’s carbon footprint.

This article delves into the intricacies of both methodologies, offering insights into their distinct calculations and implications for businesses.

Both location and market based emissions reporting applies to two emission categories: scope 2 or purchased electricity and scope 3 or fuel and energy related emissions. Let’s break down each method starting with location-based emissions.

Understanding Location-Based Emissions

Location-based emissions refers to what you physically consume at your operations site or business facility. It’s calculated using solely the average emission intensity of the local grid where you source power.

That means a location-based method doesn’t factor in any green measures you’re adopting such as renewable energy credits (RECs). So, location-based emissions would be the same regardless if you use RECs but would be different vs. your market-based emissions.

For a clearer understanding in determining your location-based emissions, let’s use an example of a business in L.A., California. You can find the actual emission factors for your local power grid from the International Energy Agency (IEA) database.

Now, let’s calculate. First step is to get the emissions factor for the average CO2 or GHG intensity of the LA power grid, expressed in kg of CO2e per kWh. Then let’s multiply that emissions factor by the building’s electricity consumption to get Scope 2 emissions.

Here’s the formula to keep in mind: kWh of electricity used x local grid emissions factor = Location-based Scope 2 Carbon or GHG Emissions

To get location-based emissions for your Scope 3, simply do the same with the upstream emission factor.

The idea behind calculating and reporting Scope 2 location-based emissions is that everyone in the same power grid is equal. Nobody gets exception and everybody shares the same emissions of the grid based on the amount of electricity they consume.

Given the formula above, one option to reduce your location-based emissions is to just decrease overall energy use. Or you can increase on-site renewable energy generation used directly by your office building or production facility.

Understanding Market-Based Emissions

Unlike location-based methods, the calculation for market-based emissions focuses on the individual company and its contract agreements in the market. Market-based emissions are associated with energy a company purchases, which is different from the power the local grid generates.

There are various instruments or contracts involved in getting market-based emissions. These include these common ones:

Renewable Energy Contracts (RECs)
Direct contracts
Supplier-specific emission rates
The residual mix

Calculating for these energy contracts or instruments should adhere to the GHG protocol Scope 2 emissions quality criteria. If they don’t, the company may still opt to report them separately for transparency. But they can’t be included in calculating market-based Scope 2 emissions.

So how does getting market-based vs. location-based Scope 2 emissions differ?

As mentioned, market-based emissions take into account energy purchase agreements. So, taking the example provided above for location-based emissions, the California company is taking its electricity from the local grid. But they want to buy RECs from a renewable energy developer.

While that company still connects with and consumes power from the grid, the market-based method requires them to factor in emissions of the RECs. By doing that, the company can claim the emission reductions from the renewable energy supply instead of applying the emissions factor of the grid as the case with the location-based method.

Here are the steps to calculate market-based emissions using this formula:

kWh consumed x Contract source emissions factor (EF) = Market-based Scope 2 CO2e GHG Emissions

Get the emissions factors for energy sources specified in the contracts (refer to GHG protocol quality criteria)
Multiple the power bought from a source by its specific emission factor. Do the same for all the sources in energy contracts and sum them all up.
For electricity use emissions that’s included in your contracts, use the residual mix emission factor.

Residual mix refers to the emission factor for the grid that excludes electricity generation claimed by your electricity contracts.

A quick tip: choose higher precision EF wherever applicable when calculating market-based emissions as the GHG Protocols Hierarchy suggests.

This approach of measuring emissions is attributed to the same energy consumed used in calculating location-based emissions. When you determine Scope 2 emissions using both methods, you don’t sum them up, but disclose them separately.

The goal is to report these two emissions side-by-side to show different stories about the same activity data.

Comparing Location-Based and Market-Based Emissions

With the differences in calculating Scope 2 emissions, which method should you use?

Given the more detailed and accurate market-based emissions, you might opt for this calculation method. After all, carbon accounting must prioritize accuracy and market-based emissions are more specific to your business operations.

However, calculating market-based is a bit trickier. You need to have a clear understanding of your contract emission factor or know if it’s 100% renewable. It matters a lot as shown in the formula, but it doesn’t fully capture the actual emissions of your energy use.

On the contrary, the location-based method does show it.

According to the World Resources Institute, “the location-based method reveals what the company is physically putting into the air, and the market-based method shows emissions the company is responsible for through its purchasing decisions”.

In other words, both methods tell different sides of the story that’s essential in showing your company’s CO2 footprint. From there, you can decide the corresponding carbon reduction strategies to adopt.

The GHG Protocol provides a comprehensive comparison between the two carbon accounting methods, including their applicability, most useful scenario, and what they miss out.

Market-Based Vs. Location-Based Emissions Method

Borrowed from GHG Protocol

Policy Implications and Carbon Offsetting

Electricity sourced from a grid lacks differentiation and cannot be distinguished based on its origin. Even if your company buys renewable energy credits (RECs) or similar instruments, they don’t significantly alter or lower your emissions. They also don’t enable a complete disconnection from the grid, unless you establish your own self-sufficient power generation.

You can account for RECs and other carbon credits in your company’s carbon offset inventory. However, they should be accounted for separately as a unique inventory line item and not included in calculating emissions from purchased power.

In contemporary electricity grids worldwide, such as those in the U.S, Canada, and Germany, integrating renewable energy does not result in disconnection from the local electricity grid. Rather, electricity generated by your renewable energy system is often sold back into the grid, with net metering commonly employed.

Consequently, you continue to use grid electricity, with any surplus clean energy benefit shared by all grid users. This integration leads to a reduction in the grid’s overall carbon intensity, a factor that’s useful in accounting for location-based Scope 2 emissions.

Location-Based vs Market-Based Emissions: Closing Thoughts

As new guidance and regulations on carbon accounting and reporting corporate emissions are strengthening, companies should know the basics, at the very least, of factoring in their harmful emissions. Knowing the different methods for accounting emissions, be it location-based or market-based, and their nuances is crucial.

While market-based emissions provide a more granular and specific picture of a company’s carbon footprint, the location-based approach offers transparency about the physical emissions generated at a site.

Recognizing the distinct stories presented by each method allows you to develop effective carbon reduction strategies in line with your company’s or organization’s operational needs and environmental commitments.

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BlackRock Places $550M Bet on Occidental’s DAC Project STRATOS

November 9, 2023/in Uncategorized /by

BlackRock Inc. will invest $550 million on behalf of clients in Occidental Petroleum’s STRATOS, the world’s largest Direct Air Capture (DAC) plant under construction in Ector County, Texas.

BlackRock, through one of its funds, has inked a deal with Occidental’s subsidiary 1PointFive to form a joint venture that will own STRATOS. This development marks a sign of growing investor confidence in the nascent DAC technology, noted by Vicki Hollub, Occidental’s CEO:

“This joint venture demonstrates that direct air capture is becoming an investable technology. BlackRock’s commitment in Stratos underscores its importance and potential for the world.”

Occidental shares jumped by 1.7% following the announcement. BlackRock’s massive investment follows major developments in the space. It also comes after the oil producer’s announcement of acquiring a DAC company Carbon Engineering for >$1 billion.

A Boom for Carbon Removal Credits

The substantial BlackRock investment accounts for about 40% of the DAC project’s total $1.3 billion cost. So far, it’s one of the biggest investments in this carbon capture technology. By reducing Occidental’s share of the cost, the oil major can allocate more capital to its oil and gas operations.

DAC pulls CO2 from the air to bury underground or use in making products like concrete and aviation fuel. Both Occidental and ExxonMobil projected DAC could become a multi-trillion market by 2050, as scale decreases the costs.

STRATOS can suck in 500,000 tons of carbon dioxide from the atmosphere annually and sequester the planet-warming gas underground. That amount is equivalent to the carbon pollution of producing 1 million barrels of oil. As such, it makes the project eligible for generating carbon removal credits.

Demand for carbon removal credits is strong as they’re viewed as superior to other types of carbon credits relying on questionable emissions accounting, claimed Occidental. Industry estimates also show rapid increase in these credits (tech-enabled) as the world strives to reach net zero emissions by 2050.

Source: Ernst & Young (EY) report

This year has seen plenty of corporate buyers signing purchase agreements with 1PointFive to buy the credits. Notable corporations like Amazon and Airbus SE have already committed to purchasing some of the credits to offset their emissions.

Days ago, TD Bank Group also bought 27,500 carbon removal credits from 1PointFive, signifying a historical deal in the finance industry.

The project is slated to begin operations in 2025 and has reached 30% completion.

This first-of-its-kind large-scale DAC plant is a test for a technology that will play a crucial role in decarbonizing the global industry, according to the International Energy Agency. Scale up of this technology is essential in the quest to net zero as shown below.

The U.S. government also identifies it as one the solutions to reduce carbon emissions. Through the Department of Energy, the government revealed its $1.2 billion funding package for two DAC projects, one of them is STRATOS.

The energy giant seeks to gain revenue from the project, running from $580 – $810 per ton of captured CO2. A portion of that amount, $180, comes from tax incentives provided by the Inflation Reduction Act. This stands in contrast to project costs running between $400 to $500 a ton, but will drop as more DAC facilities are working.

Occidental also anticipates a rise in demand for carbon removal credits, especially as airline operators seek avenues to neutralize their emissions. The company believes that these credits will be more cost-effective than emission reductions delivered by sustainable aviation fuels (SAF).

About 90% of the captured gas will be available for selling carbon removal credits.

Boosting Confidence in DAC

The joint venture between 1PointFive and BlackRock serves as a substantial investment for the latter in Texas. More so where the world’s largest asset manager has faced pushback over the past two years for its support of ESG and sustainable investment funds.

Lawmakers in the state have accused the company of boycotting the oil and gas industry. They also have taken measures to limit investments by state and local agencies in BlackRock shares and funds. But the asset manager responded that its clients had invested more than $300 billion in Texas.

BlackRock expressed appreciation in working with Occidental to help develop the world’s biggest DAC facility. The company’s CEO, Larry Fink, further noted that the energy giant’s expertise in the matter can significantly scale the decarbonization technology.

The DAC facility will create employment opportunities for over 1,000 people both for its construction and operational phases. It also highlights the role of energy companies in climate technology innovation, Fink also noted.

But the project is not without risks. Opponents have raised concerns that it can potentially be used in old oil reservoirs to increase crude oil production.

Still, for BlackRock, companies that invest in technologies like Occidental’s DAC will emerge successfully in the next few decades. Its significant investment in Occidental’s STRATOS underscores the growing confidence in DAC technology, promising to revolutionize carbon capture and contribute to global decarbonization efforts.

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Climate-Tech Startups Amass $7.6B in Q3, Setting New Record for VC Funding

November 8, 2023/in Uncategorized /by

Climate-tech startups focusing on carbon and emissions technology garnered $7.6 billion in venture capital (VC) funding in the third quarter this year, surpassing the sector’s prior record by $1.8 billion and opposing the downturn trend in fundraising.

The surge in climate-tech companies during the quarter was propelled by a series of large financing rounds supporting the construction of factories, aided by government incentives.

The Spike in Carbon & Emissions Tech VC Funding

According to PitchBook’s Q3 2023 Carbon & Emissions Tech Report, H2 Green Steel closed $1.6 billion in an early-stage round. The company uses hydrogen from renewable sources in making steel. Redwood Materials, a lithium battery recycling company, secured a $997.2 million in Series D round.

Apart from strong VC deal value for both the manufacturing & chemicals and lithium battery recycling company categories, green mining also witnessed the highest ever quarter for VC value. It saw $394.9 million across eleven deals analyzed.

Quarterly VC Funding in Carbon and Emissions Tech

A major factor in the spike in deal value is various large deals in the vertical.

Government assistance offers significantly more non-dilutive financial support for decarbonization firms compared to other sectors. This enables climate-tech experts to sidestep the fundraising challenges that have affected a large portion of the VC industry.

The 1-year-old US Inflation Reduction Act has facilitated substantial advancements in areas such as green hydrogen, electric vehicle supply chains, direct air carbon (DAC) capture, and renewable electric grid infrastructure.

What further drives the growth is automobile companies going full for electric vehicles. Highlighting this trend, a founder of an impact investor firm noted that:

“There’s a natural, inevitable scale-up that’s coming from battery technology in response to an industry that’s fully embraced becoming completely electric.”

Most of the notable transactions completed in Q3 were aimed at facilitating the construction or establishment of new manufacturing facilities. Both the burgeoning sectors of green mining and energy efficiency for buildings experienced their most lucrative quarters for VC deal value.

In contrast to sectors like SaaS and fintech, where investors have recalibrated their outlooks following the swift up-rounds of 2021, appraisals for decarbonization enterprises have maintained a relatively steady course.

Pre-seed, seed, and late-stage companies have all reported increased median pre-money valuations in 2023 compared to the previous year.

Here are the details as per Pitchbook data:

Pre-seed and seed funding increased from $2.0 million to $2.3 million
Early-stage VC funding decreased from $5.6 million to $4.1 million
Late-stage VC funding increased from $9.2 million to $10.7 million
Venture growth funding increased from $11.7 million to $14.5 million

The Force Behind Climate-Tech Firms Defying VC Trend

VCs are particularly enthusiastic about low-carbon mineral mining and DAC. This is driven by the growing demand for mineral resources and carbon removal to achieve net zero emissions by 2050.

Notably, large companies like Amazon and JP Morgan have invested hundreds of millions of dollars in carbon dioxide removal credits. Other tech giants such as Apple and Microsoft also did the same support for CDR credits.

Moreover, the recent allocation of $7 billion in federal funding for renewable hydrogen hubs across the United States revealed in mid-October, has sustained the inflow of federal funds.

This record-setting quarter comes after two lackluster quarters for climate-tech fundraising had raised concerns about a potential slowdown impacting green emerging technologies. Add to this the disruption caused by the collapse of Silicon Valley Bank, prompting companies to tap lenders for financing.

Despite the broader VC fundraising slowdown, carbon and emissions startups seem undeterred in securing substantial funding as seen above. Median deal sizes in various stages, from pre-seed to venture growth, have all experienced increases in 2023 compared to the previous year.

The impetus for climate-tech startups also stems from the escalating impact of climate change. According to climate experts, 2023 would be the hottest year since at least 1940.

As what the founder of SecondMuse further said, the “changing climate is just getting more real for more people”. This is evidenced by the growing presence of family offices supporting climate-tech companies.

Despite concerns of a slowdown, climate-tech startups surged in Q3, setting records in VC funding. The sector’s growth is driven by government support and a rising focus on carbon reduction technologies.

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Why US States Must Take Charge of Their Own Carbon Sequestration Regulation

November 8, 2023/in Uncategorized /by

The U.S. Environmental Protection Agency (EPA) is urging states to establish their own regulatory frameworks for carbon sequestration. This ensued when lawmakers intensely questioned the agency’s limited permit issuances.

In a congressional hearing, an EPA official expressed strong support for state efforts to acquire primary regulatory authority for Class VI wells used for underground carbon injection.

What Are Class VI Wells and Their Role in Carbon Capture and Sequestration?

Class VI wells are used to inject carbon dioxide (CO2) into deep rock formations as illustrated below. This long-term underground carbon storage is called geologic sequestration (GS).

GS is a type of carbon capture and storage (CCS), a technology used to reduce carbon dioxide emissions to address climate change.

Common sources of CO2 for geologic sequestration include carbon captured from point sources like from steel and cement production facilities. It can also be from energy production such as power plants or directly from the atmosphere.

The potential for these wells to manage and safely sequester captured carbon is immense. For instance, the Colorado Geological Survey estimated 720 billion tons of CO2 could be safely stored in the state’s deep underground formations.

However, widespread development of CCS projects at scale has been slow, partly because of Class VI well permitting challenges.

Despite reviewing over 150 permit applications from over 50 carbon sequestration projects, the EPA has only granted approval for 2 wells in Illinois thus far. A third project in Indiana is pending approval, which would mark the first permit issued under the current administration.

Recent legislation, including the bipartisan infrastructure law of 2021 and the Inflation Reduction Act of 2022, has allocated substantial funds for carbon capture and direct air capture (DAC) initiatives.

2021 Infrastructure Investment and Jobs Act:

Allocated $5 million/year through 2026 to EPA to permit Class VI wells and another $50 million for the agency to distribute to states with their own Class VI permitting.
Allocated $2.25 billion investment for commercial large-scale carbon sequestration projects (storing 50 million metric tons of CO2) and associated pipeline infrastructure.

2022 Inflation Reduction Act (Changes to the Section 45Q tax credit scheme):

Amended the baseline credit to $17/ton of CO2 captured and stored, with the potential to increase to $85/ton.
Introduced a new 45Q credit for DAC and carbon sequestration – $36/ton and up to $180/ton.

Moreover, under the Clean Air Act, the EPA may mandate power plants to incorporate carbon capture technology to ensure compliance.

Bruno Pigott, principal deputy assistant administrator at the EPA’s Office of Water, emphasized the role of the Class VI well application process in the success of these projects during the hearing.

The EPA also initiated the application process for $48 million in grants funded by the bipartisan infrastructure law. The funding aims to expedite the deployment of technologies reliant on Class VI wells.

Amid discussions, an executive director of Carbon180, expressed optimism about the potential to reduce the costs associated with DAC. However, Burns underscored concerns regarding the need for a robust and efficient infrastructure, stating that:

“We’re going to need to store billions of tons of CO2, and we need a robust and well-functioning Class VI permitting process.”

Fixing Delays to Fast-Track Carbon Capture Efforts

The EPA has already given Class VI well primacy upon North Dakota and Wyoming, with Louisiana’s final approval still pending. Meanwhile, West Virginia, Arizona, and Texas have applications currently under consideration.

However, lawmakers have expressed frustration with the EPA’s protracted review period for states’ primacy applications, citing Wyoming’s nearly 3-year-long process.

During the hearing, Pigott was questioned on the substantial delays of the permitting process, highlighting Louisiana’s role as a model for various elements of the application. The state received conditional approval in May this year after submitting an application in 2019.

Over half the carbon sequestration projects awaiting permits for Class VI wells are in the Gulf Coast region. This includes Chevron’s carbon capture project Bayou Bend, covering 40,000-acre expanse on the region.

The EPA acknowledged the concern and said that the agency is currently sifting through tens of thousands of comments on the proposal to grant primacy to Louisiana.

The federal agency noted that states must meet the agency’s minimum standards and establish necessary administrative and enforcement programs to qualify for Class VI well primacy.

The EPA’s encouragement for states to establish their own regulatory frameworks for carbon sequestration reflects a concerted effort to fast-track the deployment of Class VI wells. While recent legislation has allocated significant funds for carbon capture initiatives, challenges in the permit issuance process underscore the need for a streamlined approach to bolster carbon sequestration projects nationwide.

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ATCO and BOC Linde to Build $376M South Australia Hydrogen Project

November 8, 2023/in Uncategorized /by

The South Australian Government has announced its selected consortium, comprising ATCO Australia and BOC, a Linde company, to develop what ATCO dubbed as the ‘world’s largest hydrogen production facility’ and hydrogen power plant near Whyalla, South Australia for A$593 million or US$376 million.

There were 29 companies competing for winning the contract, which includes Fortescue Future Industries of billionaire Andrew Forrest. The Government of South Australia chose ATCO and BOC for their operational expertise and experience in the hydrogen arena.

Both companies have been operating in South Australia for over 6 decades now. ATCO operates Adelaide’s 180MW Osborne Power Station.

A Central Piece of South Australia’s Hydrogen Vision

Under an Early Contractor Involvement (ECI) agreement with the State Government, the ATCO Australia and BOC consortium will work collaboratively. Their responsibilities will include detailed project and engineering design, procurement of essential equipment, finalization of contracting arrangements, and cost estimations.

The project is slated to start operations in 2026.

Expressing enthusiasm for the collaboration, Peter Malinauskas, the Premier of South Australia, noted that:

“We have all the things the world will need to decarbonize – abundant copper and magnetite, the world’s best coincident wind and solar resources, world-leading renewable energy penetration and soon, the ability to harness this abundant clean energy in the form of hydrogen.”

The Australian region aims to generate 100% of its energy from renewable sources by 2030. The whole of Australia pledged to reduce carbon emissions by 43% by 2030 and reach net zero by 2050. A crucial part of hitting these climate goals is Aussie’s carbon market where Australian Carbon Credit Units (ACCUs) are traded.

Echoing similar remarks on decarbonization, Nancy Southern, Chair & Chief Executive Officer of ATCO, said that they’re working closely with various stakeholders to “build better communities and make meaningful progress on decarbonization”.

The ambitious initiative will include a 250 MW (megawatt) hydrogen production facility alongside a 200 MW hydrogen-fueled electricity generation facility. Both facilities are a central component of South Australia’s hydrogen vision.

South Australian taxpayers will own the facilities with the government’s funding of US$376 million.

One of the preferred partners, ATCO Australia, has been advancing hydrogen in various initiatives such as the hydrogen natural gas blending project in Canada and Australia.

Through its Department for Energy and Mining, the Government of South Australia seeks to strengthen its engagement with major hydrogen stakeholders and scale up the industry through various projects and initiatives.

And that includes the Hydrogen Jobs Plan and the US$7 million demonstration project involving a 1.25 MW electrolyzer. It’s known as the Australian Gas Networks Hydrogen Park in Adelaide’s southern suburbs.

This groundbreaking initiative signifies a significant leap forward in advancing the hydrogen-driven economy. Globally, industry estimates show that hydrogen generation could reach more than $230 billion.

Revving Up the Hydrogen Revolution

In a separate initiative, Australian hydrogen infrastructure company H2U is developing a facility integrating over 75 MW in water electrolyzers. Their goal is to produce renewable hydrogen and renewable ammonia on Eyre Peninsula in South Australia.

Over in Arizona, USA, Nikola Corporation is driving the advancement of the complete hydrogen refuelling ecosystem. It’s an integrated truck and energy company, transforming commercial transportation through its battery-electric and hydrogen fuel cell electric trucks, and HYLA, Nikola’s hydrogen station brand.

Its HYLA brand secured a total of $58.2 million in grants from the California state government.

Announced in its recent Q3 2023 report, Nikola continues to see strong demand for its zero-emissions trucks fuelled by regulation and incentive tailwinds. And despite the trucks being in recall, the company still got orders for 47 battery-electric trucks from a single dealer.

Additionally, dealers consistently submit HVIP (Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project) applications for Nikola’s battery-electric trucks.

Currently, Nikola and its dealers have received 277 non-binding orders from 35 customers for the hydrogen fuel cell electric truck. With the launch of the truck last September, Nikola focuses on ensuring adequate hydrogen supply and fuelling solutions to customers.

On the other side of the hydrogen highway, First Hydrogen Corp. (TSXV: FHYD) (OTC: FHYDF) (FSE: FIT) is revolutionizing the hydrogen-fuel-cell-powered vehicle (FCEV) segment.

The company’s FCEV for light commercial vehicles boasted a range of >630 km (400 miles) on a single refuelling. The FCEV has been trialed with energy company SSE Plc. and fleet management company Rivus.

Recently, First Hydrogen held its first-ever track day at the HORIBA MIRA, UK. The event enabled attendees to test drive the company’s FCEV and see its under-the-hood technology.

South Australia’s ambitious hydrogen project, alongside Nikola and First Hydrogen Corporation’s works, underscores the increasing global focus on hydrogen as a key energy source.

Disclosure: Owners, members, directors and employees of carboncredits.com have/may have stock or option position in any of the companies mentioned: FHYD

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Toyota’s Hydrogen Fuel Cell Vehicle Sales Saw 166% Increase

November 6, 2023/in Uncategorized /by

It’s no secret that Toyota’s hydrogen fuel cell Mirai has not been successful in sales as the carmaker itself admitted. But that didn’t discourage the Japanese automaker from planning to accelerate the adoption of hydrogen fuel cell (FCEV) technology.

In its latest sales and production report, Toyota has shown year-on-year growth in both performance results globally.

Total sales of electrified vehicles, both inside and outside Japan as well as per region (North America, Europe, Asia, China, and other) have increased significantly. It’s also true across the board for reporting coverage – for September 2023, total from January-September 2023 and from April-September 2023.

Toyota’s FCEV Sales Performance

Toyota’s worldwide electric vehicle (EV) sales were up about 52% for the month of September. The same positive performance was achieved for 2023 (31%), and for the first half of fiscal year, April-September, (38%).

For FCEV sales, positive results are also observed for global sales but not for the outcome for Toyota’s home country. Hydrogen fuel cell EVs are also using an electric motor like a battery EV but it sources power from a fuel stack where hydrogen is stored.

Worldwide sales for FCEV increased for September, last nine months, and last six months by 166%, 22%, and 77%, respectively.

The remarkable results are all thanks to the carmaker’s sales outside Japan, with a whopping 289% increase for September. For the last 6 months and 9 months, figures were both up about 94% and 47%, respectively.

Looking at the yearly achievements, FCEV sales peaked in 2021 and painted a good picture overall. 2023 data is through September only, which the company believes to also increase YoY.

As Toyota aims to sell more by 2030, the company plans to tap into this technology that’s been touted as the future of mobility.

The Fight for Hydrogen Vehicle Goes On

The largest carmaker by sales has long placed a huge bet on FCEV as an alternative to fossil fuels. But the company’s sales of hydrogen vehicles weren’t that significant. It has only sold fewer than 22,000 hydrogen fuel cell Mirai since 2014.

The average annual number of FCEV sold was so insignificant compared to Toyota’s total vehicle sales. Expensive cost of the fuel and lack of hydrogen fueling stations are the two largest bottlenecks hindering sales growth.

Yet, this didn’t dissuade the car company to continue investing in and developing its hydrogen fuel cell technology.

In October, Isuzu and Toyota joined forces to mass produce a light hydrogen fuel cell truck. The truck is based on Isuzu’s light-duty truck platform and will be powered by Toyota’s hydrogen fuel cell system.

Toyota’s FCEV technology is also facing close rivalry from its peers, including Hyundai, Honda, Nissan, and Daimler. Hyundai has had fuel cell vehicles on the market for several years already. Meanwhile, Honda has also been experimenting with FCEV and improving it for some time.

Nonetheless, Toyota made headlines last July when it revealed plans to roll-out 200,000 hydrogen-powered vehicles, targeting Europe and China.

Such revelation is a major shift in Toyota’s focus, which announced intent to commercialize its game-changing solid-state battery by 2027. These next-gen batteries can potentially cut carbon emissions of EV batteries by 39%.

Reducing planet-warming emissions is one of the key drivers prompting Toyota, as well as other automakers, to invest in fossil fuel alternatives like FCEV. The ultimate goal is to bring the world to net zero emissions by 2050.

Toyota’s Net Zero Targets

For the Japanese car marker, that means achieving zero carbon emissions in three areas: lifecycle, new vehicle, and production at plants.

Life Cycle Zero CO2 Emission Target

The company aims to reduce GHG emissions by 30% throughout a vehicle’s life cycle by 2030 versus 2019 levels. As seen below, life cycle includes emissions from making materials and parts to vehicle manufacturing, logistics/delivery, driving, and recycling.

GHG emissions cover energy consumption in Toyota Motor Corporation and financially consolidation subsidiary corporate activities (Scopes 1 and 2). It also includes GHG emissions from suppliers and customers in relation to vehicles under the company and its subsidiaries (Scope 3).

New Vehicle Zero CO2 Emissions Target

In making new vehicles, Toyota aims to achieve carbon neutrality for average emissions (emissions from production of fuel and electricity and during vehicle operation) by 2050.

Reaching that goal means achieving its near-term targets for new vehicle average GHG emissions by 2030 and 2035 as follows:

2030: 33.3% GHG reduction from new vehicles vs. 2019 levels for passenger light duty vehicles and light commercial vehicles. For medium and heavy freight trucks, that’s 11.6% emissions reduction.
2035: over 50% GHG emissions reduction from new vehicles compared to the 2019 baseline.

Plant Zero CO2 Emissions Target

Finally, Toyota plans to achieve zero CO2 emissions from production at plants by midcentury. This includes CO2 emissions from energy use in Toyota and its subsidiary plants, as well as CO2 emissions from producing other Toyota brands, involving Scope 1 and 2 emissions).

Under this target, the Japanese automaker plans to tackle the environmental challenge at its factories with the following strategy.

Part of the plan is to purchase carbon credits from other companies to neutralize CO2 emissions. However, Toyota didn’t disclose how much of that emissions would be addressed using the credits.

Toyota’s pursuit of hydrogen fuel cell technology continues, showcasing global sales growth despite challenges in its home country. With a focus on reducing planet-warming emissions and achieving net zero targets, the company remains committed to advancing its FCEV technology.

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1PointFive Sold 27,500 Carbon Removal Credits to TD Bank Group

November 3, 2023/in Uncategorized /by

1PointFive, Occidental Petroleum’s subsidiary that’s developing the world’s largest direct air capture (DAC) plant, and TD Bank Group (TD), 6th largest bank in North America, entered into one of the finance industry’s biggest purchase deals of carbon removal credits.

The credits will come from STRATOS, 1PointFive’s DAC plant currently under construction in Texas. The facility has already sold several advance purchases of carbon removal credits (CDR) to other major companies seeking to offset their emissions.

Under their agreement, TD Securities agreed to buy 27,500 metric tons of carbon dioxide removal credits over 4 years. The amount of the CDR credits is one of the largest bought so far by a financial institution.

TD has over 16 million active online and mobile customers, with $1.9 trillion in assets on July 31, 2023.

First Large-Scale DAC Technology Deployment

Direct air capture, popularly known as DAC, is one of the emerging carbon removal technologies. The U.S. Department of Energy believes that it’s a game-changing technology that has the potential to help the economy head toward net zero.

1PointFive’s STRATOS can capture and remove up to 500,000 metric tons of carbon dioxide from the atmosphere annually. It’s also designed to be the world’s first large-scale commercial deployment of DAC technology for secure and durable storage in geologic formations.

This DAC project is one of the DOE’s $1.2 billion grant awardees, alongside Climeworks’ Project Cypress.

The CDR credits from 1PointFive’s DAC plant will provide a high-integrity solution for companies to reach their net zero targets. The facility can remove up to 1 million tons of CO2, which is scalable up to 30 million tons a year. Thus, if that happens, it would be one of the world’s biggest experiments in DAC.

STRATOS will use DAC technology from Carbon Engineering’s (CE), a company acquired by Occidental for $1.1 billion. The technology uses giant fans to suck in CO2 that would be pumped underground or utilized to make valuable products.

The image illustrates how CE DAC technology works in capturing CO2.

As per 1PointFive’s President and Michael Avery, the credits from DAC will be “measurable, transparent and durable, with the goal of providing a solution for organizations to address their emissions.”

Amazon and Houston sport franchises the Texans and Astros have also bought CDR credits from 1PointFive. It’s Amazon’s first big investment in carbon removal credits.

The captured carbon underlying the removal credits sold to TD Securities will be particularly stored underground in geologic formations.

Carbon Offsets for TD’s 2050 Net Zero Target

By buying CDR credits from 1PointFive, TD Securities plans to add to its portfolio of carbon offsets as it seeks to build its trading capabilities both in the voluntary and compliance carbon markets.

Ernst & Young (EY) projected the volume and contribution of carbon removal credits by 2050. In particular, their outlook includes nature-based and technology-enabled, where DAC belongs, net zero scenarios with removal-based credits.

Remarking on their deal, Global Head of ESG Solutions Amy West said:

“As the need to move from climate commitments to action intensifies, corporations across all sectors are looking for tangible ways to achieve their net zero goals… We’re incredibly proud to partner with 1PointFive to support innovative, technology-based solutions that are intended to advance both our clients’ and our own decarbonization goals.

The move complements TD Securities’ wider ESG Solutions platform focusing on giving clients short, medium and long-term solutions for transitioning to a lower carbon economy. Moreover, the carbon removal credits from the transaction will also be for offsetting TD’s own operational emissions.

TD unveiled its Climate Action Plan to reach net zero emissions associated with its operating and financing activities by 2050.

This ambitious plan also includes the creation of a new TD Finance and Corporate Transitions Group to provide clients with advisory services and essential sustainability-focused financing globally. These sustainable finance activities include the following:

Listed on the Dow Jones Sustainability World Index for 9 consecutive years
Currently the top-ranked North American-based bank on the World Index
An active member of the International Emissions Trading Association (IETA)
Formed a Carbon Markets Advisory team, focusing on the compliance and voluntary markets
Invested $10 million in the Boreal Wildlands Carbon Project, the largest private land conservation effort in Canadian history

Bringing Confidence and Scale to Carbon Markets

Moreover, last year, TD Securities became part of Rubicon Carbon’s coalition of corporate sustainability lenders. Their goal is to help scale up the carbon market and bring confidence and innovation across its segments.

This year, the financier revealed its new Sustainable and Decarbonization Finance Target for the next decade. With this initiative, they aim to generate CAD$500 billion through various financial activities, including financing, lending, insurance, and investments.

Transitioning to a low-carbon economy is not easy and it requires revolutionary approaches across industries and adoption of innovative technologies. A senior vice president at TD believes that direct air capture is a promising tool that can help advance progress in this sector.

The groundbreaking purchase deal between 1PointFive and TD Bank Group signifies a pivotal step in bolstering carbon removal efforts. It could help drive a wave of confidence and scale in the emerging carbon removal market.

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Carbon Credits to Take Center Stage at UN COP28 Climate Talks

November 3, 2023/in Uncategorized /by

At the upcoming UN climate talks, COP28, in Dubai next month, carbon credits will take center stage. These credits, bought by companies to offset their carbon emissions, allow them to consider consumed goods and services ‘carbon neutral’.

Carbon credits are from various projects that suck in or store carbon. These include anti-deforestation efforts, replacement of coal-fired power plants with renewables, and energy-efficient cookstoves.

Each credit signifies the reduction or removal of one tonne of CO2, allowing businesses to offset their CO2 footprint.

Carbon credits have grown since their integration into the 1997 Kyoto Protocol. However, their credibility faced substantial questioning this year following several scientific studies and investigative reports casted doubts on the voluntary carbon market (VCM), which operates independently of the UN process.

At the COP27 climate summit last year, the UN Secretary General expressed concerns about the lack of standards, regulations, and rigor in the VCM.

At this year’s COP28, talks will seek to clarify the complexities surrounding the participation of nations in carbon offset markets.

Renewing Credibility in Carbon Credit Market

The United Arab Emirates, COP28 host, expressed hopes for advancements during the Dubai summit to bolster credibility in carbon credit markets.

In a study focusing on averted deforestation, researchers concluded that emission reductions and project benefits were exaggerated. They also raised concerns about the lack of independence among project inspectors and the lenient practices of carbon credit certifiers such as Verra.

The research also highlighted the overflow of carbon offsets with minimal actual reductions achieved. While this study focuses on nature-based projects, many other carbon reduction initiatives exist as mentioned earlier.

At the 2023 Carbon Markets Summit in July, research firm Sylvera along with Pachama assembled a group of global leaders to delve into the present complexities and future potential of carbon markets. They produced a comprehensive report detailing the current state and future trajectory of this critical sector.

One of the findings revealed that carbon credits, through a last resort, do not mean later. The mitigation hierarchy does encourage reductions first over offsetting using carbon credits. But companies can buy them throughout their net zero journeys, so long that they don’t replace actual reductions.

More notably, corporations are moving upstream and become more involved earlier in projects, focusing on the ‘contribution’ approach over offsetting. It means they’re in a flight to quality to secure future supplies of high-quality credits. This trend will persist this year and beyond.

Declining Prices, Growing Market

Amid quality criticisms, the pricing of carbon credits for nature conservation projects witnessed a sharp decline. It plummeted from $18 dollars/tonne in January 2022 to $6 in January 2023, eventually dipping below $2 by mid-October.

Despite the dip in carbon prices, credit retirements remained strong in 2022 and on track to break records in 2023. As per report by Bloomberg with support from Carbon Growth Partners, there was an astounding 350% increase in annual retirements since 2016.

Carbon credit issuance peaked in >350 million in 2021 and slightly decreased in 2022 and 2023. Bloomberg projections indicate that the carbon credit market could go up to $8 billion by 2050.

More importantly, corporations are not the only entities relying on carbon credits to hit carbon neutral goals.

Article 6 of the Paris Agreement permits countries to collaborate in meeting emission reductions goals, including transferring carbon credits. This is also known as the “Internationally Transferable Mitigation Outcomes” or ITMOs.

This opens avenues for significant state investments in carbon credits, with developing nations relying on them for critical climate funding.

Oil-producing countries view them as a cost-effective means to achieve net zero emissions. Saudi Arabia is already unveiling a national offset scheme for corporations aligning with Article 6 of the Paris Agreement.

This matter is important in the lead up to COP28 when the Paris Agreement mandated the climate conference to deliver the first ever Global Stocktake – a comprehensive evaluation of the world’s progress against climate goals.

Keeping 1.5°C Within Reach

COP28 UAE will open a great opportunity for the world to come together and drive progress to keep 1.5C within reach.

During this critical event, the UAE will lead a process for all parties to come up with a clear roadmap. This pathway will fast-track progress toward global energy transition through inclusive climate action.

Taking place at Expo City in Dubai from November 30 to December 12, COP28 conference will convene >70,000 participants. They include heads of state, government officials, industry leaders, private sector, academics, experts, youth, and non-state actors.

And while the climate agenda involves several topics, talks about carbon credit markets will definitely be one of them.

The upcoming COP28 summit is poised to tackle critical concerns surrounding the fight against climate change. As discussions around carbon credit markets intensifies, the push for greater transparency and regulatory standards gains prominence. The convergence of global leaders and stakeholders at COP28 offers a good opportunity to discuss carbon credit concerns at the highest level.

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