Uncategorized – Page 73 – The Global Carbon Fund

Oman’s Mangrove Restoration Could Generate $150 Million in Carbon Credits

November 2, 2023/in Uncategorized /by

The government of Oman has been restoring mangroves quickly, a valuable natural resource, not just for their essential role in the global environmental ecosystem but also for their integral part in absorbing carbon. The goal is to eliminate planet-warming emissions while generating $150 million economic benefits through carbon credits.

6,000 years ago, mangroves were widespread in Oman but only one species remains today because of climate change. So the country aims to restore the coastal forest of these carbon-busting trees.

The Richest Carbon Sink in the World

Mangroves are highly effective carbon sinks, playing a crucial role in sequestering and storing atmospheric carbon dioxide. They possess several mechanisms that contribute to their carbon sequestration ability, including photosynthesis, sediment trapping, slow decomposition, and peat formation.

Moreover, mangrove habitats can remove CO2 from the atmosphere faster than forests and store it in the soil and sediment for longer periods.

A study by the University of Bonn revealed that climatic changes account for the collapse of coastal ecosystems in Oman.

The Arab nation is home to only a single species of mangrove tree, the Avicennia Marina, found along the coastline stretching from North al Batinah to Dhofar. This area covered by mangroves expands around 1,000 hectares.

Oman has then become the Gulf’s center for mangrove restoration and preservation.

The Middle East country, through its Environment Authority (EA), inked a deal with MSA Green Projects last month to launch the Oman Blue Carbon. Their project seeks to cultivate 100 million mangrove trees in the country.

The initiative aligns with the Sultanate’s National Zero Carbon Strategy 2050, outlining its goal to reach net zero emissions.

Oman’s Projected Decarbonization Efforts to 2050

Badr bin Saif Al Busaidi, the EA representative, said that their restoration efforts were a success. She further noted that up to 80 tons of CO2 per hectare can be sequestered by above-ground biomass in Al-Qurm.

An environmental scientist said that “mangroves are the richest carbon sink in the world.” They’re known as one of the nature-based solutions that corporations support to combat climate change.

The $150 Million Carbon Credit Benefits

The Oman Blue Carbon project marks the first initiative aiming to produce carbon credits through growing mangroves.

So far, the Gulf nation has planted more than 3.5 million seeds of mangroves over the past 2 years. This includes a record 2 million trees this year.

Twenty years ago, there wasn’t a single mangrove standing in Al-Sawadi creek. But now it’s a forest stretching over 4 kilometers with 88 hectares of hangover cover.

The mangrove restoration project has developed gradually, inspired by the late ruler Sultan Qaboos bin Said, a renowned conservationist.

The conservationists initially relied on nurseries where they grow seedlings for transfer to coastal areas. They’re using a direct, targeted planting approach in restoring the coastal habitat.

Oman’s contract with MSA Green Projects to grow 100 million trees over 4 years would remove 14 million metric tons of CO2. This, in turn, would give the country the chance to earn $150 million in carbon credit benefits.

Each carbon credit represents one metric ton of reduced or removed CO2 from the atmosphere.

As part of their agreement, the Al Wusta governorate will transform 20,000 hectares of coastal land into mangrove habitats.

The corresponding carbon credits the initiative generates can be used by companies seeking to offset their carbon emissions. The amount of carbon offset credits the project produces would be measured against Oman’s baseline emissions – 90 metric tons in 2021.

Winning the War with Nature

The minor oil producer, compared with its neighbours Saudi Arabia and United Arab Emirates, is moving fast in this mangrove restoration project. Highlighting the importance of their swift move, one of the conservationists involved in the project said:

“We are living what we can call a war with nature because of climate change. If we don’t take action, we will lose these natural resources.”

The Sultanate is also developing its green hydrogen production via Hydrom, aiming to produce 1 million tonnes by 2030. That target moves up to over 8 million tons by 2050. This ambitious goal is also part of Oman’s clean energy transition and net zero strategies.

Oman’s ambitious mangrove restoration project not only signifies a critical step in combating climate change but also presents a lucrative opportunity, positioning the country as a key player in the global carbon credit market.

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South Pole Cuts Ties with Zimbabwe Carbon Offset Project Kariba

November 2, 2023/in Uncategorized /by

Doubts loom over the credibility of the carbon market’s major credit source as the partnership supporting Zimbabwe’s Kariba mega-project crumbles. The project was previously supported by the leading global carbon offset seller, South Pole, raising concerns about the credits’ integrity.

South Pole has ended its participation in the main forest conservation project in Zimbabwe due to recent claims of exaggerated claims. The move may result in job losses for around 20% of the company’s workforce, according to reports. The company employs around 1,200 workers across 30 countries.

Carbon Offsets and Their Role in Reducing Emissions

Carbon offsets enable businesses and individuals to balance their carbon emissions by paying for removing carbon elsewhere. They evolved into a billion dollar global market that’s projected to grow even more up to $50 billion by 2030.

South Pole’s decision was prompted by concerns about the Kariba REDD+ project’s compliance with their partnership standards. REDD means “Reducing emissions from deforestation and forest degradation in developing countries”.

Owned and developed by Carbon Green Investments (CGI), the Kariba REDD+ project, one of the world’s largest forest conservation initiatives the size of Puerto Rico, has issued about 36 million credits since 2011. These credits represent the removal or prevention of a ton of carbon dioxide from the atmosphere.

According to the Swiss carbon developer’s statement:

“All activities related to carbon certification and carbon credits from the Kariba REDD+ project will now be the responsibility of CGI, and South Pole’s role as the carbon asset developer has ended.”

Despite ending its collaboration with CGI, South Pole emphasized that the existing carbon credits remain valid. The termination of the partnership comes amid increasing scrutiny and challenges to the project’s integrity and the associated carbon credits.

The New Yorker’s report and an ongoing investigation by Verra have added to the controversy, casting doubt on the effectiveness of the sold carbon reductions. South Pole said it would cooperate with the investigation and reassess its involvement in Kariba based on the findings.

The Kariba Project

Kariba REDD+, started in 2011, is designed to conserve 785,000 hectares or almost 2 million acres of forest in northern Zimbabwe. It has been a major recipient of funding through carbon credits as corporations support projects that remove carbon from the atmosphere.

Many multinationals such as L’Oreal, Gucci, Nestlé, McKinsey and Volkswagen have voluntarily bought credits from Kariba to offset their emissions. Below is the volume of credits delivered by the project since 2013 until 2022, peaking at over 6 million in 2021.

Source: South Pole website

The Kariba project led to significant growth for South Pole. But recent months have seen increased scrutiny and challenges for the project and carbon offset initiatives at large.

Publications from different sources revealed that South Pole, alongside Verra, were associated with forest protection credits that claimed to fail to deliver the promised carbon reductions.

Further investigations into the Kariba project argued that only a fraction of the pledged investments in Zimbabwe are verifiable on-site. The African nation is the 12th largest carbon offsets producer worldwide. It recently amended its carbon law to allow developers to keep more profits from carbon credits.

Following those publications, some companies have withdrawn from the Kariba project, such as Gucci. In a broader context, similar studies suggested that carbon offset projects like Kariba overestimate the levels of deforestation they prevent.

Robust Methodology and Safeguards Are Crucial

“Carbon offset methodology is ‘not perfect’,” South Pole CEO Renat Heuberger says in defense of the company’s practices. He further noted that they’re consistently adhering to the approved methodology for the Kariba project.

Heuberger also emphasized the uncertainties involved in deforestation projects, remarking that predicting rates 10 years in advance is challenging.

Verra, the leading carbon credit certifier overseeing about 75% of voluntary carbon credits globally, acknowledged the importance of a critical evaluation of the market. The nonprofit also noted the imperfections in the system, emphasizing their commitment to continuously improve their methodologies to reflect evolving best practices and the latest scientific insights.

The use of safeguards in carbon offset programs to maintain climate integrity has never been more crucial. These programs usually allocate 10-20% of nature-based project credits for insurance purposes – also called a buffer pool.

Kariba, for instance, has set aside 5 million credits into the Verra-administered buffer pool.

Still, experts suggest that the buffer may not be enough to cover the unavoidable risks caused by climate change. In particular, concerns have been raised regarding the undercapitalization of the buffer pool in California’s carbon market. This is due to the vulnerability of forest offset projects to natural phenomena like wildfires.

Nevertheless, buyers of carbon credits need certainty. This is where insurance can help by providing a creditworthy wrapper around their investments, increasing confidence in the market.

The works of Kita Earth, a carbon credit insurance company, aim to reduce this kind of risk to help drive finance to scale high-quality carbon projects.

Given the case of Kariba, carbon insurance will play a significant role and will soon become a market standard. It will provide extra due diligence and quality assessment, safeguards when things don’t go as planned, and help build trust to scale this essential market that help combat the climate crisis.

Jess Roberts, Vice President of Ratings at Sylvera, asserted the importance of robust calculations and advocated for a more cautious approach to safeguarding credits.

Amid heightened scrutiny, the Kariba REDD+ project’s legitimacy as a key carbon offset source has faced questioning, prompting South Pole to severe its ties with the initiative. The controversy calls for a re-evaluation of existing methodologies and safeguarding practices to bring credibility to carbon markets.

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Carbon Removal Startups Are Finding More Places and Funds to Store CO2

November 1, 2023/in Uncategorized /by

The urgency to do something with the surplus of carbon in the atmosphere led to a surge in innovative approaches aimed at securing stable and contained storage solutions.

Notably, a number of startups in the carbon removal sector have drawn substantial investor interest, attracting hundreds of millions in funding over the course of this year, according to Crunchbase data. From underground storage to concrete mix and ocean sequestration, their strategies have gone beyond concepts to viable carbon removal solutions.

Recent funding trends reveal a notable increase in financing activities related to carbon removal initiatives. This surge in investment signifies a growing recognition to explore alternative solutions, considering the slow uptake of clean energy sources.

It further highlights the pressing need to fast-track the deployment of effective carbon reduction measures alongside existing clean energy efforts. Here are the startups with interesting carbon removal technologies, broken down by the places where they’re store the carbon.

Stowing Carbon in Soil

One common place to store carbon is in the soil. While capturing carbon through soil won’t be enough to remove what’s already in the air, it does help reduce emissions.

However, this would be an easy task for most farmers, especially in cropping systems. This is where Loam Bio’s solution comes in to help farmers adopt farming practices that sequester more carbon.

The Australian startup aims to improve the quality and quantity of soil carbon capture via its unique microbial technology. Loam Bio, which closed a $73 million Series B round in February, said that its carbon sucking technology can turn croplands into giant carbon sinks.

Plants or crops do absorb CO2, but a San Francisco-based carbon removal startup, Charm Industrial, offers a different solution. It takes waste biomass, transforms it into bio-oil (stable, carbon-rich liquid), and then pumps it deep underground for permanent storage.

The company bagged $100 million in Series B funding for the goal of putting oil back underground. Here’s how its carbon removal technology works:

Sucking-in Carbon Through the Ocean

Recently, a trending way to store carbon is through the ocean. A couple of startups are developing technologies to capture and store carbon in this body of water.

On the list are two names that capture investors’ eyes – Ebb Carbon and Captura.

California-based Ebb Carbon, founded by former executives of Google X and Tesla, secured a $20 million Series A funding. The ocean-based carbon removal company claims to offer a solution to remove carbon at the gigaton scale.

Ebb is using an electrochemical ocean alkalinity enhancement technology, which speeds up the natural process of ocean alkalization that restores ocean chemistry while safely sucking in CO2 from the atmosphere.

Another startup that believes in the power of the ocean is Captura, also based in California. The carbon removal company is developing direct ocean capture (DOC) technology that filters CO2 out of seawater, enabling oceans to remove more carbon.

Captura’s process uses only renewable electricity and seawater to remove CO2 from the air, with no by-products and no absorbents. Their technology attracted $12 million from investors.

Locking Away Carbon in Concrete

Buildings, particularly those made from concrete, are considered as one of the major contributors to greenhouse gas emissions. That’s mainly because traditional Portland cement is responsible for emitting huge amounts of CO2 (about 8% of global GHG emissions).

Thus, several startups are creating ways to make low-carbon concrete and even carbon-negative. CarbonCure Technologies, a Nova Scotia-based company that’s backed by Amazon and Microsoft, is a leader in carbon removal for the concrete industry and a provider of high-quality carbon credits. Each ton of removed CO2 generates a credit.

The startup injects captured carbon into fresh concrete, locking it up so it doesn’t return back to the atmosphere. Its innovative technology attracted $80 million in a new equity round led by Blue Earth Capital in July.

Another significant player in this field is C-Crete Technologies, a startup innovating carbon sequestration for its patented cast-in-place (pourable) concrete. Its technology captures CO2 and makes it as an ingredient for a cement-free, carbon-negative concrete.

Each ton of C-Crete’s cement-free binder can prevent 1 ton of carbon emissions. Its technology attracted two separate funding support from the U.S. Department of Energy – almost $1 million and $2 million.

While some of these startups have demonstrated that their technologies work in capturing and removing carbon from the atmosphere, scaling them up remains unproven and carries a major risk as climate experts noted.

Yet, the massive investments poured into their innovative models and technologies speak of confidence in technology deployment and scalability.

In summary, here are the carbon removal-focused funded startups rounded on the list.

The surge of innovative startups in the carbon removal sector reflects a growing commitment to combat climate change by deploying practical solutions to store carbon across diverse environments. While the scalability of these technologies remains a concern, the significant investments flowing into these ventures underscore a growing confidence in their pivotal role in mitigating the effects of too much carbon in the air.

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3 Important Things Happening in Hydrogen Right Now

November 1, 2023/in Uncategorized /by

The potential of hydrogen as a clean source of energy is gaining momentum with major companies investing heavily in it and working to bring it to mainstream. Here are the three important things unfolding in the industry right now that’s worth knowing.

Duke Energy Corp. has unveiled plans to construct and operate a groundbreaking green hydrogen system at its DeBary Solar Power Plant in Florida, whereas First Hydrogen will showcase the unrivalled potential of hydrogen in powering vehicles.

Meanwhile, the US Department of Energy’s laboratory cautioned that hydrogen blending in natural gas pipelines has limits due to leakage. They then suggested fixes to help pipeline operators determine which transmission line segments need modification or replacement.

Duke Unveils First-of-its-Kind Green Hydrogen System

The energy giant said that this initiative will be the “nation’s first system capable of producing, storing and combusting 100% green hydrogen in a combustion turbine”. With construction commencing later this year, the system is expected to be fully operational by 2024.

The project will integrate solar energy to power two 1-MW electrolyzer units, producing oxygen and green hydrogen for safe storage and subsequent use in a combustion turbine. This system will be retrofitted to run on a natural gas/hydrogen blend or pure hydrogen using GE Vernova technology.

This innovative endeavour reflects Duke Energy’s anticipation of hydrogen’s significant potential in achieving decarbonization across sectors of the US economy. It will also help the energy company in ensuring grid reliability amid the increasing integration of renewable energy sources.

The initiative is a collaboration between Duke, GE Vernova, and Sargent & Lundy LLC, and is part of Duke’s comprehensive “Vision Florida” program. It comprises several cutting-edge projects such as microgrids, battery storage, and solar-plus-storage installations, with a project budget of $100 million.

As the industry anticipates the economic viability of green hydrogen-fuelled power plants, the International Energy Agency’s recent reports emphasize the need for robust policy support and investment efforts. This is crucial to accelerate the adoption of low-carbon hydrogen production worldwide, with green hydrogen production playing a pivotal role.

The agency estimated that low-carbon hydrogen production could grow significantly by 2030, reaching 38 million metric tons per year. As for market size, estimates show global hydrogen generation could reach over $230 billion.

One particular company that’s making the first move to leverage such immense growth in hydrogen production is First Hydrogen Corp.

Showcasing Hydrogen’s Unmatched Potential

First Hydrogen (TSXV: FHYD) (OTC: FHYDF) (FSE: FIT) sells and leases next-generation hydrogen fuel cell powered commercial vehicles. They’re the exact type the Department of Energy is predicting to explode.

The company’s demonstration vehicle, FCEV, became road legal, boasting a range of 500 km or more. And trial results beat that range with their FCEV clearing 630 km range in a test with SSE Plc.

Rivus, with 120,000 vehicles in their fleet, has also praised the unparalleled results in their analysis. First Hydrogen’s light and medium-sized hydrogen commercial vehicles can refuel in minutes, just like a gas-powered car.

With that, First Hydrogen had announced recently that it will host first-ever track event for its FCEV at the end of October on the track at HORIBA MIRA, UK. Invited participants will get hands-on access to the first-of-their-kind FCEV and the chance to drive them.

But the company is more than just delivering hydrogen-powered vehicles; it’s also planning to build its own hydrogen production.

First Hydrogen is among the many believing that hydrogen is becoming a star player in the transition to cleaner energy. Other companies also recognize this transformative shift and pioneer hydrogen blending projects in the U.S.

However, a DOE laboratory warned about one particular challenge that hydrogen blending faces.

The Key Limitation of Hydrogen Blending

A study by the Argonne National Laboratory revealed that hydrogen’s tendency to worsen pipeline leakage could hinder the industry’s efforts to blend the clean fuel in natural gas transmission lines.

Their modeling showed that introducing a 30% hydrogen blend in gas pipelines resulted in a 6% reduction in lifecycle GHG emissions.

However, the research highlighted that blending could potentially increase the leakage from transmission lines, negating the upstream and downstream benefits. This is due to the differences in energy density between methane and hydrogen – H2 has ⅓ of CH4’s energy density.

That means increasing flow rates and pressure to carry hydrogen in pipes also increases methane leak rates.

Source: DOE website

Senior scientist Amgad Elgowainy emphasized the challenges posed by increased flow rate and pressure during the October webinar hosted by the Energy Department to showcase the initial findings of its HyBlend initiative.

The National Renewable Energy Laboratory (NREL), contributing to the HyBlend program, devised a tool to help operators identify pipeline assets suitable for blending, pinpoint segments needing modifications, and estimate associated costs.

To address the mismatches between maximum allowable operating pressure (MAOP) across pipeline segments, NREL proposed three solutions:

Replace segments with appropriate material grade and wall thickness;
Pipeline looping: installing pipes that operate parallel to existing segments that don’t align with H2 piping standard; and
Add compressor stations between segments that don’t match the standard.

In a case study involving the Alliance Pipeline LP, NREL found that pipeline looping emerged as the most cost-effective method. Most remarkably, they also discovered that the capital and operating costs associated with modifying gas pipelines to transport hydrogen has a minimal impact on the delivered cost of energy.

Duke Energy’s pioneering green hydrogen system and First Hydrogen’s unmatched hydrogen fuel cell vehicle solution signify a significant leap forward in the journey toward sustainability. However, the Department of Energy’s analysis underlines critical limitations and proposes vital solutions for effectively integrating hydrogen into existing natural gas infrastructure.

As the energy industry embraces the transformative power of clean hydrogen, strategic measures are crucial to ensure a smooth and efficient transition, balancing environmental benefits with infrastructure requirements.

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First Hydrogen Track Day with Europe and UK’s Largest Companies

October 30, 2023/in Uncategorized /by

First Hydrogen Corp. (TSXV: FHYD) (OTC: FHYDF) (FSE: FIT) announced further to its previous news that its first-ever track day will be held on October 31st at the HORIBA MIRA, UK.

First Hydrogen is a Vancouver and London UK-based company focused on zero-emission vehicles, green hydrogen production and distribution. The company’s hydrogen-fuel-cell powered vehicles (FCEV) boasted a range of >630 km (400 miles), which is far more than the minimum range requirement for zero emission vehicle (ZEV) at 193 km only.

The vehicles have been trialed with energy company SSE Plc. and fleet management company Rivus.

All attendees will get the chance to test drive the company’s FCEV and see its under-the-hood technology. Fortune Business Insights projected that the global EV market will grow from $500 billion in 2023 to nearly $1.8 billion by 2030.

Attendees will include some of Europe’s and UK’s largest companies from various sectors, including parcel delivery, supermarkets, healthcare, leasing, utilities, and mining.

As the company’s CEO said: “With the UK Government’s recent recognition of FCEV within its definition of ZEV, sales of the FCEVs will be included in production targets for ZEV.”

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UK Carbon Credit Scheme, ETS, Under Fire for Profitable Plant Closures

October 27, 2023/in Uncategorized /by

A loophole in the UK Emissions Trading System (ETS), designed to reduce planet-warming emissions, allows companies to profit millions of dollars from unused carbon credits after closing factories, leading to concerns about the misuse of the government scheme.

Notably, the closure of a fertilizer plant by US firm CF Industries in Cheshire resulted in a windfall of £32 million (over US$39M) from the sale of carbon credits. Several other companies, including Mitsubishi Chemical and Cemex, have also benefited from the said “loophole”, triggering calls for immediate regulatory changes.

The Controversy Surrounding UK ETS

Under the UK government carbon trading scheme, firms in the heavy industry are given a free allocation of emissions. This is to prevent UK businesses from being disadvantaged compared to their foreign peers operating in nations with weak climate policies.

Same as the EU ETS, companies in the UK must buy credits if their carbon emissions surpass their allocation. If they have unused or excess credits, they can sell those in carbon markets at the end of the year. The scheme is considered as fundamental to the UK’s net zero strategy.

Greenpeace’s Unearthed investigated the UK ETS. Their investigation found that the scheme allocated free carbon credits to companies that closed plants, thereby reducing their emissions.

There’s no time limit as to when the companies can sell the credits. That means they can wait when carbon prices are high to sell the credits and earn profits from it. The price surged to £100/tonne last year.

Unearthed particularly discovered that US fertilizer giant CF Industries received 630,000 carbon credits from shutting down two UK factories. The company first closed its plant in Ince last year, causing 350 job losses.

The unused carbon credits gave CF Industries an income of £32 million by selling those credits under the UK ETS. The total worth of the credits stand at £49M, using the average UK carbon price from 2022 of £78/tonne.

Another company, Mitsubishi Chemical, has also shut down one of its plants in Billingham, Teesside this 2023. This caused over 200 people to lose their jobs.

Production at one of the world’s biggest chemical plants stopped, causing a significant drop in the company’s emissions. The chemical plant emitted 182,000 tonnes of carbon in 2021, which dropped to only 6,000 in 2022 due to the closure. This leaves Mitsubishi with 155,000 free carbon allowances, which is worth about £12 million.

The investigation also found that the UK Government has no way to recall the credits once they have been allocated.

The issue has raised concerns among environmental campaigners about the prioritization of financial gains over environmental and social responsibilities.

Calls for Regulatory Changes

With the growing outcry, policymakers called for an urgent solution to close the loophole in the UK carbon scheme. This loophole gives companies that reduce emissions by closing plants the opportunity to earn millions from trading carbon credits.

Labour MP Alex Cunningham, in particular, emphasized the need to prevent companies from capitalizing on emissions reductions at the expense of local jobs and communities.

The questionable practice has sparked debates about the effectiveness of market-based mechanisms in curbing emissions.

According to a carbon market expert at Carbon Market Watch, under the current UK ETS rules, a factory that shuts down on January 2nd will get free emissions allowances for the entire year. The government can’t get those credits back in any way.

Remarking on this scheme, the expert further noted that allocating carbon credits to ghost plants “doesn’t serve climate goals or any economic purpose.”

As per Unearthed, the UK government is currently reviewing its free carbon allowance rules. However, any proposed changes to the rules will be accommodated by 2026.

Whenever a firm stops operations or leaves the country, their carbon allowances won’t be distributed in the next year.

For the proponents of the carbon trading scheme, they argued that it helps the country in meeting its ambitious climate goals. It was able to cut emissions by over 48% since 1990, quicker than any other G7 nation.

A spokesman for the Department for Energy Security and Net Zero commented that:

“As previously announced, we are reviewing free allocation rules to make the system as robust as it can be while continuing to support UK businesses through the transition to net zero.”

In theory, carbon credit markets are designed to incentivize initiatives that reduce harmful emissions. Each credit represents a tonne of removed or avoided emissions.

While there are some issues surrounding the validity and quality of the credits in carbon markets, studies have shown that they helped major companies cut emissions. High quality credits meet a set of criteria, validating their emission reduction claims.

The UK’s emissions trading system has come under scrutiny as companies profit from the closure of factories and the resulting unused carbon credits. The controversy has led to demands for immediate regulatory amendments to prevent the misuse of the government carbon credit scheme meant to help achieve net zero emissions.

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Carbon Credits Are a Key Player in Closing Carbon Emissions Gap

October 27, 2023/in Uncategorized /by

Carbon credit prices are projected to increase dramatically as more lofty climate goals are made and achieved, according to a report published by Bloomberg with support from Carbon Growth Partners.

The report “Investing in Carbon Markets: Cleared for Take-Off” underlines the importance of carbon credits in reaching net zero emissions. It also highlights the need to invest in the market with growing demand and close the emissions gap.

Closing the Emissions Gap

In 2023, the carbon market faced significant challenges. Yet, a surge in corporate demand, alongside stricter carbon credit generation rules, will push the market from oversupply to scarcity. In effect, this will drive carbon prices upward, particularly for nature-based credits, at over $55 per tonne of carbon dioxide in voluntary carbon markets.

The significance of carbon credits as a pivotal tool in bridging the emissions gap is underscored by a whopping 350% increase in annual retirements since 2016.

Carbon Credit Retirements by Project Type (tCO2e)

Substantial further growth in offsetting efforts is necessary to meet the target of limiting global warming to 1.5°C. This calls for total emission reductions of 150 billion tonnes of CO2 equivalent by 2030, 45% below 2019 levels.

The report also said that the investment needed in renewable energy will be over $44 trillion by 2030.

However, several challenges, including higher borrowing costs, competition for limited capital, and economic slowdowns, may lead to a scaling back or deferral of investments in internal decarbonization by companies. This drives a significant surge in corporate demand for carbon credits as a supplementary strategy throughout the decade.

Many corporations are intensifying their emission reduction commitments, with 6,323 entities taking action under the Science-Based Targets Initiative. Together, they’re emitting around 32 billion tonnes of greenhouse gas each year, involving Scope 1, 2, and 3 emissions.

Collectively, these climate pledges suggest a substantial potential demand for carbon credits, even with conservative action scenarios. There’s also a possibility of annual demand for credits reaching 6x the total annual supply from existing and pipeline projects if businesses with an approved SBTi target opt to offset 20% of their emissions.

Moreover, given the sensitivity of carbon pricing, a moderate increase in corporate climate goals and action would push prices up.

New Driver of Demand for Carbon Credits

A burgeoning demand for carbon credits is coming from a new and notable source – investors who recognize the potential of the expanding carbon market.

Though institutional investor involvement has been limited so far, an increasing interest is evident. Many investors are starting to see the opportunity to generate financial returns while supporting climate solutions.

Recognizing the prospective increase in carbon prices due to government and business commitments to carbon emission reduction, major players such as Citi Group and JP Morgan have committed substantial sums to carbon credits.

Citi Group, in particular, emphasizes the enduring nature of the market, claiming that it is “here to stay”. Two months later, JP Morgan revealed its $200 million investment in carbon removal credits to decarbonize operations.

Similarly, State Street also announced its pioneering role in offering carbon asset fund administration and depository services. This will help facilitate the integration of carbon-related assets such as voluntary carbon credits into investment portfolios.

Notably, one of the largest asset management companies in the world found out that as an asset class, carbon assets can improve portfolio diversification and efficiency.

Other institutional investors, including Temasek, AXA, CPP Investments, and TPG, have also made significant investments in various carbon-related ventures. The last three companies opted to fund forest protection projects, which generate carbon credits in return.

Their move indicates a growing trend towards using carbon markets for diversified financial returns and climate impact mitigation.

Bloomberg’s latest report, supported by Carbon Growth Partners, highlights the indispensable role of carbon credits in combating climate change, drawing attention to the increasing participation of institutional investors. This dynamic market shift underscores the pivotal role of carbon credits in closing the emissions gap and achieving climate targets.

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ACX Reveals Major Trades on Historic Carbon Credit Exchange in ADGM

October 27, 2023/in Uncategorized /by

AirCarbon Exchange (ACX) revealed that its exchange and clearing house in Abu Dhabi Global Market (ADGM), became live. The carbon exchange also announced that key trades have already started on their platform, expected to be a rapidly expanding market for voluntary carbon credit trading.

Singapore-based ACX is a digital exchange seeking to speed up the world’s journey to net zero which uses blockchain technology to securitize carbon credits. These credits are certificates representing certain carbon emission reductions achieved by an initiative or project.

The Pioneering Move in Carbon Credit Regulation

Emissions trading schemes in carbon markets are valuable instruments to reduce greenhouse gas emissions. In the voluntary carbon markets (VCM), carbon credits are called carbon offsets, demand for which is projected to skyrocket.

In compliance carbon markets, the credits are allowances or cap on the amount of carbon companies can emit. When they exceed the emissions cap, they can buy carbon credits from others with surplus or unused allowances.

In February last year, Singapore-based ACX worked with the ADGM to establish the world’s first regulated carbon credits trading exchange in the emirate’s capital. ADGM will regulate the credits and the offsets as emission instruments while also issuing licenses for exchange platforms to work both as spot and derivative markets.

Abu Dhabi’s sovereign wealth fund, Mubadala, acquired a 20% stake in ACX in November 2022. This move is part of the fund’s economic diversification and commitment to responsible investing.

In the same year, the ADGM made history by becoming the first jurisdiction to regulate voluntary credits as financial instruments. This milestone was facilitated through the Environmental Instrument classification, which established a regulatory framework for licensing exchanges and clearing houses.

Following that groundbreaking step, ACX Abu Dhabi became the first entity to be licensed under ADGM’s framework. The exchange earned the recognition as the world’s first regulated Recognized Investment Exchange and Recognized Clearing House.

Setting the Stage for Carbon Credit Trading

The regulatory licenses gained by ACX significantly bolstered trust, security, and investor protection within the carbon credit trading space. By mandating fair trading practices, real-time market surveillance, and strict adherence to regulatory standards, ACX ensured heightened market integrity, transparency, and efficient price discovery.

With these in place, ACX successfully laid the groundwork for enabling VCM participants to trade under a robust regulatory framework.

Asserting the significance of this historic achievement, Arvind Ramamurthy, Chief of Market Development at ADGM noted that:

“As we find ourselves in a critical time with the development of global carbon markets, this step marks a momentous milestone in the journey towards a thriving market for voluntary carbon markets.”

The inaugural carbon credit trade on the fully regulated carbon trading platform occurred through a collaboration between First Abu Dhabi Bank (FAB) and Helix Climate.

FAB is UAE’s largest bank whereas Helix Climate simplifies the process of trading, settlement, valuation and retirement of carbon credits in the VCM. Their involvement underscores the importance of this remarkable evolution in the carbon market landscape.

Leading the Way to Market Integrity and Climate Action

Expanding its offerings, ACX Abu Dhabi announced the successful execution of the first trade on its Carbon Market Board (CMB). It is an advanced electronic trading platform that enables participants to carry out and finalize over-the-counter transactions.

The significant trade was in collaboration with South Pole, a renowned global leader in climate project development and solutions provision. The carbon developer’s Executive Director, Abderrahman Kasmi, emphasized the pivotal role of ACX in fortifying the integrity of carbon markets.

ACX’s commitment to innovation in this sector was recently acknowledged by Environmental Finance. It awarded ACX Abu Dhabi the prestigious title of the best carbon exchange of 2023 for the third consecutive year.

Meanwhile, ADGM’s progressive ecosystem allows businesses and investors to voluntarily buy verified carbon credits, signifying testament towards climate action.

Partnering with ACX is part of the United Arab Emirate’s net zero strategies. It’s also in preparation for hosting the upcoming climate change conference, COP28, in Dubai.

The UAE leads the process for all COP28 parties to come up with a clear roadmap to accelerate progress to inclusive climate action by employing a pragmatic global energy transition and a “leave no one behind” approach. The COP28 Action Agenda provides a practical plan of action to turn the Paris Agreement objectives into reality.

With the adoption of advanced technology and a robust regulatory framework, ACX could help facilitate transparent and secure carbon credit transactions, fostering trust and integrity within the burgeoning carbon market landscape.

The post ACX Reveals Major Trades on Historic Carbon Credit Exchange in ADGM appeared first on Carbon Credits.

Sustainable Biomass Sourcing: A Buyer’s Guide for Biomass-Based CDR Contracting

October 27, 2023/in Uncategorized /by

Carbon Direct, a carbon management solutions provider, just published a practical buyer’s guide for sustainable biomass sourcing to help mitigate the risks of biomass-based carbon dioxide removal (CDR) contracting.

The guide is a product of collaboration between buyers and Carbon Direct’s expert advisory group with large corporations as signatories, including Microsoft, Shopify, and Stripe. It provides practical insights for CDR agreements while emphasizing the need for stringent standards and oversight for sustainable biomass sourcing.

The report also underscores the potential of biomass-based CDR in fighting global warming and achieving ambitious climate targets. It marks an initial step toward establishing effective safeguards through its four sourcing principles, each with its own criteria.

While not a standard or certification, the report considers multiple implementation pathways, aiming to minimize risk and pave the way for the industry’s expansion.

Mitigating Risks in Biomass-Based CDR Contracting

The biomass-based CDR industry is expanding rapidly in the voluntary carbon markets. And as demand for durable carbon removals grows, biomass-based solutions are at the forefront.

Most of the available supply of highly-durable CDR to date include bioenergy with carbon capture and storage (BECCS), biochar, and other biomass carbon removal and storage (BiCRS). These biomass-based CDR projects can scale rapidly in the next decade, with millions of tonnes of announced offtake agreements already.

Given that the largest biomass-based CDR projects will start storing carbon as early as 2026, the report focuses on tools and frameworks that will be executed within the next few years. This near-term approach is crucial in providing recommendations for seamless integration into contracts involving different biomass-based CDR applications.

Per global projections, the demand for biomass in ambitious decarbonization scenarios could potentially surpass conservative estimates of sustainable, low-lifecycle-emissions supply by a considerable margin, ranging from 11x to 16x by the year 2050.

These studies, while showing varying figures, all underscore the significant disparity between the accessible biomass resource and its various potential applications in a net zero economy. The chart shows the variance between demand and supply of biomass by 2050.

A Mismatch Between Biomass Demand & Supply by 2050

The biggest potential source of new demand for biomass is energy conversion. Some estimates suggest that biomass demand from biopower alone would consume all supply by 2050. These projections emphasize the importance of developing sound guardrails on biomass use before these industries scale up.

This is where the new guidance comes in, providing the guardrails to mitigate the risks of biomass-based CDR contracting. This goal is guided by four core sourcing principles outlined in the document.

The 4 Core Principles for Sustainable Biomass Sourcing

The principles are achievable through the satisfaction of a set of criteria and implementation options as suggested.

Principle #1.

The criteria for this principle are as follows:

Source certified through an independent, third-party audited forest certification standard; or from areas of low risk (determined by risk-based assessment).
Source from jurisdictions with robust forest governance or strong oversight of forest certification standards (using the Corruption Perception Index (CPI) and similar resources).
Biomass must be traceable across the entire supply chain, from the sourcing jurisdiction to point of conversion for carbon removal.

Chain-of-custody (CoC) tracking is often the primary method used to trace products from their source to their final destination.

Principle #2.

Complying with the second principle involves these things:

Sourcing from wood processing operations with low risk of impact to community’s health,
Sourcing from forest operations respecting the rights of the Indigenous Peoples (IPs),
Sourcing from forest operations protecting the economic, social, and environmental well-being of workers.

Principle #3.

The third principle emphasizes the importance of forest protection and preservation with biomass sustainably sourced from:

Areas not considered as primary forest (per UN FAO definition) or old-growth forest (per national/subnational definition),
Forest management initiatives that don’t threaten protected areas or High Conservation Value forests (unless harvest is explicitly granted),
Forest management efforts that preserve or improve ecological functions (e.g. biodiversity, soil health, regeneration, and nutrient cycling),
Areas where forest stocks are in steady-state or growing.

Principle #4:

This last principle focuses on biomass sourcing that doesn’t compete with existing agricultural or forestry products. The biomass must be:

A by-product of non-energy products or services,
From wood that can be accounted for existing economical counterfactual biomass uses (carbon storage) to understand the real carbon benefits of biomass,
Not from plantation forests developed within the past 2 decades (except previously used for agricultural purposes for ten or more years).

Each criterion is accompanied by a comprehensive explanation in the guide. The criteria provided seek to provide specific, measurable outcomes, with multiple implementation options for flexibility.

Though the report considers the most conservative option as “preferred”, it emphasizes the potential for customized oversight in specific cases. It particularly depends on certain factors at play in specific area.

Finally, buyers should take into consideration any trade-offs between practical and conservative approaches when adopting the recommended options into their biomass-based CDR offtake agreements.

Below is the list of the prominent voluntary and regulatory certification schemes that certify forest biomass provided in the guide.

Biomass Certification Schemes

As the biomass-based CDR industry continues to expand, establishing effective safeguards and standards for sustainable biomass sourcing is crucial. Carbon Direct’s buyer’s guide provides comprehensive insights and principles for mitigating risks and ensuring responsible sourcing practices.

By emphasizing the necessity of stringent oversight and sustainable biomass sourcing, the guide paves the way for the industry’s sustainable growth and underscores its significant role in global climate action.

The post Sustainable Biomass Sourcing: A Buyer’s Guide for Biomass-Based CDR Contracting appeared first on Carbon Credits.