America’s Richest 0.1% Emits 62x More Than a Typical US Household

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A new study led by the University of Massachusetts Amherst suggests that America’s richest people, whose investment income are responsible for the considerable part of the nation’s carbon emissions, should be taxed. 

The researchers found that the top 0.1% wealthiest Americans emit 3,000 tons of carbon a year, or equal to over 62x more than what a typical American household emits – 48 tons. 

The authors of the study published in PLOS Climate said they aim to get the answer to this question: “What happens when we focus on how emissions create income, rather than how they enable consumption?”

They examined huge datasets covering 30 years to determine how income relates to carbon emissions. Their results call on US lawmakers to reconsider the current carbon taxation to address climate change. 

Richest Americans’ Share of The Nation’s Carbon Emissions 

The study’s model provided a carbon footprint for every dollar of economic activity in the U.S. The researchers did that by looking at inter-sectoral financial transfers and their associated flow of income and carbon emissions. They then came up with 2 different values for income’s carbon emissions – supplier and producer. 

The supplier value refers to emissions from industries/companies that supply fossil fuels while the producer value refers to carbon emitted directly from business operations themselves. 

The researchers then linked that information to households using data showing industries where people work and their earnings. They analyze data income from two different sources: active income from employment (wage/salary) and passive income from investments.

As such, their study is the first to link income from financial investments to carbon emitted in generating that earning. Here are the major insights they found out.

The Key Facts:

For 90% of Americans, wages give them the money they need to live and buy things they want. These people are in the lower and middle income households whose carbon emissions are mostly linked with their salaries. 

But for the wealthiest 10% (Top 1%+Next 9% income group), they’re getting most of their income passively from investments. And the researchers found that over 40% of the country’s national emissions were from the income of those 10%. These wealthy people earn more than $178,000 annually.

The authors also discovered that the higher income group pollutes more through their investment income. In particular, the top 1% wealthiest Americans are responsible for up to 17% of the country’s total emissions. These extra rich people make more than $550,000 a year.  

Most notably, their results also included the top 0.1% or the “super-emitters” as what the authors call them. These extremely wealthy Americans get most of their income from investing in finance, insurance, and mining industries, the report said. Their investment income drives >50% of emissions.

They’re called super-emitters because they’re responsible for producing around 3,000 tons of carbon each year. Compare that with 2.3 tons of carbon per year – the emissions limit for each person to mitigate global warming, and to the typical American household emissions of 48 tons a year. 

The authors also shared this insight: 

15 days of income of the rich in the top 0.1% pollute as much carbon as a lifetime of income for those in the bottom 10%.

The study further suggests that income size isn’t the only contributor to climate but also the industries that create it. 

For instance, a household that earns $980,000 from fossil fuel industries is a super-emitter. However, a household sourcing income from the hospital industry has to earn $11 million to generate the same amount of carbon.

With these facts, the lead author, Jared Starr, noted how relevant their findings are for policymakers, saying that:

“This research gives us insight into the way that income and investments obscure emissions responsibility… An income-based lens helps us focus on exactly who is profiting the most from climate-changing carbon pollution, and design policies to shift their behavior.”

Tax The Rich People’s Income Instead of Consumption

The researchers recommend that governments must rethink how they use carbon taxes. Rather than taxing things that people buy, (consumption-based approach), policymakers should focus instead on making shareholders responsible for the carbon emissions of their investment incomes. 

The authors believe that a shareholder-based taxation can help countries achieve the goal of keeping global temperature levels to 1.5C. 

According to Starr, consumption-based taxation misses something crucial about limiting carbon emissions and noted that it is rather “regressive”. It means the carbon tax punishes the poor and has little impact on the wealthiest people whose large amount of income is saved or reinvested into stocks. That portion of income is, therefore, not subject to a carbon tax. 

Take for instance the case of the top 1% of household earners who’s responsible for 15-17% of national emissions. That carbon pollution is about 2.5x higher than their consumer-related emissions (6%), as per the report. 

The trend is exactly the opposite for the bottom 50% of American earners whose share of national emissions is 31%. That’s 2x more than their income-based carbon emissions (14%). 

The further the income distribution goes up, from the top 10% to top 0.1%, the more carbon emissions are generated from investments, instead of salaries the households earn. 

Thus, carbon taxes focusing on shareholder income linked to carbon emissions seem to be more reasonable, the authors suggest. This can help incentivize the rich people who significantly profit from their carbon-intensive investments such as oil and gas to decarbonize their industries. The government can then use the revenues earned from their taxes to invest in decarbonization initiatives. 

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Cargill Pioneers Wind-Powered Ship With 37.5M High Sails to Cut Emissions

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America’s largest private company and world’s largest agricultural shipping firm, Cargill, has made its maiden voyage using special sails powered partly by the wind. The goal is to study how wind power can help reduce energy use and carbon emissions of cargo ship and the entire sector.

Cargill is hauling 225 million tons of dry bulk cargo around the world each year on over six hundred vessels. One of these cargo ships is retrofitted with WindWings sails designed to cut fuel use, and thus, shipping’s carbon emissions. 

Harnessing Wind Power to Decarbonize Shipping

The maritime industry currently accounts for almost 3% of global carbon emissions largely because of its reliance on carbon-intensive bunkers. And over 80% of the global merchandise trade by volume is shipped by sea. 

According to the International Maritime Organization, the industry is producing over 830 million tonnes of carbon each year. That’s equal to spewing as much CO2 as 283 coal-fired power plants do in a year. 

The industry faces pressure from environmentalists and investors to accelerate decarbonization. As such, major players have been exploring some ways to shift away from dirtier fuels to cleaner power sources. And Cargill finds renewable wind power a promising option to explore. 

One of the commodity giant’s chartered massive cargo ships, 80,000-ton Pyxis Ocean just sailed from China to Brazil using two gigantic sails called WindWings. The ship is owned by Mitsubishi Corporation’s shipping arm while creating the revolutionary sails is also funded by the European Union. 

The pioneering wind-powered carrier is the world’s first to be retrofitted with two 37.5 meters or 123-foot high sails. When the vessel is in port, the wings, made from the same material as wind turbines, fold down and open out when in open water. 

The enormous wings can reduce the ship’s fuel consumption by about ⅕, according to its designer BAR Technologies. This maiden sail is an opportunity for Cargill to see if returning to the traditional way of moving ships would be the way forward for transporting goods at sea.

If the test becomes a success, the charterer will install WindWings to ten more ships. After all, “wind is there for free”, as Cargill’s ocean transportation president Jan Dieleman says. He further added that there’s no silver bullet to decarbonize the industry but believes that wind-assisted propulsion technology can help. 

Wind-Powered Sails Are Making a Comeback 

Sailing through the wind has been the way of moving things and people until powerful fossil fuel-powered ships took over. Now, wind-powered shipping is making a comeback, though not that fast.

Pyxis Ocean joins a tiny fleet of only 2 dozen large commercial ships run by some form of wind-assisted propulsion. For more than 110,000 new-build order vessels, only below 100 feature wind-assisted technology currently. 

But if more ship owners, operators, and charterers choose to also use renewable energy to fuel their fleet, it can make a huge difference in cleaning up the dirty shipping industry. 

For America’s largest private firm by revenue, the groundbreaking technology can help reduce emissions and decarbonize bulk cargo by 30%. The company also claimed that installing WindWings is possible for both existing cargo ships and new constructions. 

According to Yara Marine Technologies, the company that produced the sails, giant crude carriers can install up to six WindWings. That means more fuel and carbon emission savings. 

If the vessel is powered by a clean fuel (e.g. green methanol), the sails can drive down costs. If the cargo ship is burning fossil fuels, wind power can reduce carbon emissions. 

Here’s the estimated fuel savings of installing WindWing as per BAR Technologies:

1 WindWing sail can save 1.5 tons of oil-derived fuel per day on an average route
2 WindWing sails like the Pyxis Ocean can save 1,095 tons a year (20% of what a Kamsarmax vessel consumes each year)
Installing 3 WindWing sails on Kamsarmax ship can save about 30 tons on fuel

Saving 1 ton of marine fossil fuel use is equivalent to reducing about 3 tons of carbon dioxide emissions. 

These savings on CO2 emissions is critical as the global shipping industry has to meet its ambitious targets. And same with the rest of the industries, it has to reach net zero emissions by 2050. 

Other parts of the sector have been using innovative technologies on their ship to help cut down carbon emissions. 

In June, a Norwegian cruise line made headlines by sailing the world’s most energy-efficient and first zero emission cruise ship. It’s also harnessing the power of the wind, plus the sun with its solar panel-covered retractable sails. Other efforts focus on ammonia and hydrogen for clean shipping. 

While wind-assisted propulsion technology won’t make a huge impact right now in cleaning up the sector, it’s gaining some traction. BAR Technologies and Yara Marine have another project to install WindWing sails on a different vessel. 

Cargill’s groundbreaking move is to help their partners in the maritime industry transition to a more sustainable future. As Dieleman remarked, 

“We’re always used to going the shortest way… Now, you might want to go the way where there’s more wind.”

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Nature-Based Carbon Offsets Crucial in the Road to Net Zero

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While a few instances may have tarnished its reputation, dismissing all carbon offset projects as “greenwashing” because of a few probable bad actors is like throwing the baby out with the bathwater.

How Effective Are Carbon Offsets?

In the face of the escalating climate crisis, the urgency to achieve net zero emissions has never been more pronounced. The world is confronting a climate emergency, underscored by the unmistakable extreme weather patterns occurring across the globe. Given these circumstances, it is surprising that we even are having this debate. 

Amid the discussion around a few possible cases of potential exaggeration, carbon offsets often come under fire for being viewed as a convenient “get-out-of-jail” card for emitters. Critics argue that these offsets allow companies to maintain their emissions without addressing the root causes.

However, this perspective fails to acknowledge that the process of transitioning towards a low-carbon economy is both intricate and gradual. The road to a net zero state demands attention not only on emission reduction but also on carbon sequestration.

The goal of net zero, simply put, involves balancing the amount of greenhouse gases emitted into the atmosphere with an equivalent amount removed. As we strive to find this balance, carbon offsets offer a pathway that harmonizes economic growth with ecological restoration.

The essence lies in enhancing natural systems like forests, wetlands, and farmlands absorbing more carbon dioxide than they release.

The IPPCC report earlier this year underscored the immediate and pressing necessity for more ambitious actions aimed at emission reduction.

In this perform-or-perish battle, it’s crucial to acknowledge that nature-based carbon offsets were never meant to be a standalone approach. Rather, they are just one piece in the broader strategy to reduce emissions. While there have been instances of problematic nature-based carbon offsets, there are also legitimate offsets that reduce and mitigate emissions.

Let’s look at some statistics.

According to the United Nations Framework Convention on Climate Change (UNFCCC), 13 out of the 60 developing countries which reported REDD+ activities to the UN Climate Change Secretariat, reported a reduction of almost 10 billion tons of carbon dioxide. That is almost twice the amount of greenhouse gas emissions from the United States in 2020, and taking 150 million cars off the road for a year. 

REDD stands for ‘Reducing emissions from deforestation and forest degradation in developing countries. The ‘+’ stands for additional forest-related activities such as sustainable forest management and conservation, and enhancement of forest carbon stocks. Projects under REDD+ regulated by the United Nations can yield results-based payments for emission reductions when they reduce deforestation.

Undoubtedly, transforming REDD into a market-based mechanism holds great potential as a critical action to combat climate change. At the same time, it advances the SDGs agenda in the Global South.

Beyond natural ecosystems, agriculture plays a pivotal role in the carbon offset narrative. Sustainable farming practices, such as zero-till or reduced-till farming, agroforestry, cover cropping etc. bolster soil health while simultaneously capturing carbon.

Agroforestry, for instance, involves integrating trees into farmland, enhancing carbon sequestration and providing numerous benefits such as improved soil fertility, water conservation, and diversified income streams for farmers. 

No-till farming involves growing crops without disturbing the soil, resulting in numerous benefits. These include reduced soil erosion, improved soil health and air quality, and increased water retention. It can also sequesters 0.3 tons of carbon/acre/year, noted by a Soil Society of America paper. 

As has happened in the Canadian Prairies.

The Canadian Agri-Food Policy Institute notes that the adoption of “no-till methodology has had a dramatic impact on carbon losses in western Canada, moving the provinces from a net loss of carbon to a net gain position since 1981”. 

In fact, carbon sequestration in Saskatchewan farmlands due to zero till farming is in the range of 0.3 to 0.65 tons per acre per year, according to another study conducted by GHG Registry, an organization founded by a group of academics focused on creating rigorous scientific standards for carbon sequestration projects, and the scientific team of CarbonTerra, a Saskatchewan-based company engaged in building a carbon-neutral agriculture ecosystem in the province.  

Aside from providing farmers with an additional income stream, the process augments soil organic carbon content. For example, the Chicago Climate Exchange currently compensates land managers with approximately $2 to $3 per acre for adopting practices like conservation tillage to sequester CO2, the Soil Society of America paper notes.

This improvement in soil composition leads to heightened productivity, decreased soil erosion and nutrient runoff, and improved water quality. Soil carbon sequestration thus presents a mutually beneficial outcome for both the agricultural sector and the environment.

Further, such sustainable farming practices also lead to a decrease in the utilization of equipment and labor on agricultural land. Thus, cutting down fossil fuel emissions associated with these operations.

In fact, studies have estimated that adopting no-till practices can result in as much as a 71% reduction in the GHG impact compared to conventional tillage methods.

Carbon Offsets a Powerful Tool

Nature-based carbon forest offsets allow individuals, companies, or governments to offset their carbon footprint by investing in projects that remove or reduce carbon dioxide from the atmosphere. This helps neutralize emissions and combat climate change. 

The industry has two segments: the compliance market, where entities are legally required to offset their emissions under regulations or agreements, and the voluntary carbon market, where entities choose to offset their emissions for ethical or reputational reasons. It is the voluntary market which has been under scrutiny in recent times.

In general, the offset industry is experiencing remarkable growth. The value of the global carbon credit market reached upwards of $850 billion in 2021, a 164% increase from 2020, according to Refinitiv.

Meanwhile, the voluntary carbon market alone grew at a record pace, reaching $2 billion—four times its value in 2020. And the pace of purchases is still accelerating in 2022, according to a report by BCG. By 2030, the market is expected to reach between $10 billion and $40 billion.

The nature-based carbon offset market was valued at $0.6 billion in 2020. This represents just 0.01% of the compliance credit market, as per a report from HSBC Centre of Sustainable Finance. However, according to BCG, nature-based solutions will be one of the most popular project types in the voluntary carbon market.

Need For Robust Regulations

As the regulatory frameworks struggle to keep pace with this rapidly evolving global market, as is with any new industry, the carbon offset sector is presently grappling with teething troubles.

Nonetheless, these obstacles didn’t deter the agri-foodtech investors from placing carbon-related startups at the forefront of their investment priorities for 2023, as noted by the AgFunder Global AgriFoodTech Investment Report 2023.

Establishing norms for strong governance, independent verification and standards of the market are crucial steps for reliable nature-based carbon offsetting. So are tackling issues such as additionality, leakage, and permanence.

The 2015 Paris Agreement had already established guidelines for proper accounting of offsets, laying the groundwork for their integration. 

Last month, the Integrity Council for the Voluntary Carbon Market (ICVCM) published its full Core Carbon Principles (CCP) Assessment Framework. It sets high standards that aim to elevate the quality of the voluntary carbon market. ICVCM claims the CCP Framework will help restore confidence, deliver impact and attract increased investment for urgently needed climate solutions.

At the same time, ICVCM has also emphasized that there is no path to 1.5C without nature-based solutions. 

Earlier, the new Claims Code of Practice released by the Voluntary Carbon Markets Integrity Initiative (VCMI) in June this year, provided guidance for private companies and other non-state actors on how to use carbon credits to achieve their short-term emissions reduction goals and long-term net-zero commitments. The VCMI recommends that companies “must purchase only high-quality carbon credits representing emissions reductions and/or removals from outside the value chain of the company”. 

These are promising strides toward enhancing transparency and establishing standards within the carbon offset market. They replace the wide array of norms and a patchwork of regulatory systems across countries.

Let’s be honest, the recent critiques of nature-based carbon offsetting actually is a boon in disguise that is providing us with an opportunity to reflect on the state of the market and learn valuable lessons.

Already what is emerging as an encouraging trend is buyers showing a clear preference for a reputable monitoring, reporting, and verification (MRV) framework as a top criterion for purchasing credits. Over 90% of buyers rank MRV as a major factor in credit purchase decisions, noted the BCG report.

As the focus on carbon offsets intensifies, buyers are increasingly inclined to ensure that the credits they acquire are high-quality. Or what ICVCM calls them “high-integrity”, thereby safeguarding against accusations of greenwashing.

Despite the initial teething troubles, the carbon industry has great potential to really contribute to the fight against climate change. But for that, the industry must be open to criticism and willing to evolve.

By concentrating on proven approaches and achieving substantial net negative emissions on a large scale, we can cultivate public trust. Meanwhile, it is also imperative for all stakeholders including governments, regulators, and even investors, to demonstrate a responsible and ethical approach to carbon offsetting.

Contributed by: Anusuya Datta and Rachel Hor

Author Bios

Anusuya Datta: A writer/journalist with a special interest in earth observation and sustainability issues. Anusuya has written for several international platforms, including Geospatial World, Space News, and CBC among others.

Rachel Hor: Founder and COO, CarbonTerra. An experienced and proven global technology and business leader, Rachel is passionate about climate sciences while having vast experience in the financial services space globally and has led technology transformation. Her recent work is focused on sustainability in various verticals. 

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Google Signs Up Shell’s SAF Program to Cut Business Travel Emissions

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Google has joined a Shell-backed sustainable aviation fuel (SAF) program intended to scale up SAF as part of its stride to be carbon neutral throughout entire operations by 2030.  

The SAF program called Avelia was launched last year by Shell and American Express Global Business Travel (Amex GBT). It allows airlines to sell SAF and corresponding carbon credits to business customers. 

The world’s most popular search engine is the latest multinational corporation to sign up for the SAF and carbon credit program. 

Reducing Aviation’s Carbon Emissions with SAF

Aviation is one of the sectors that finds it challenging to reduce its carbon footprint and reach net zero emissions. And business travel is a critical customer segment for airlines as it generates 40% of their revenues. It also represents about 15% of global air travel, as per Amex GBT president Andrew Crawley.

Crawley further noted that having Google onboard their SAF program shows how corporate collaboration can help make travel more sustainable. It can also help ramp up the aviation industry’s transition to net zero.

Why Avelia?

Shell and Amex GBT launched the Avelia program with the goal to provide companies with access to SAF and use it to reduce their business travel emissions. The paid premium price will also ramp up the demand for emerging low-carbon biofuels like SAF. 

Avelia is the first blockchain-powered SAF “book and claim” tool built together by Shell Aviation, Accenture, and Energy Web Foundation. The initiative aims to offer 1 million gallons of SAF credits to buyers, equivalent to powering about 15,000 corporate travels from London to New York.

As Shell Aviation puts it, 

“Avelia aims to jumpstart the SAF market by enabling business travelers and airlines to share the benefits of SAF while each receiving respective credit for the associated carbon emission reductions.”

SAF is made from renewable and sustainable resources that can be combined with fossil-based jet fuel to slash emissions. As a ‘drop-in’ fuel, airlines can use SAF without the need for modification and it’s currently in use. 

Experts consider SAF as one of the most promising solutions to accelerate the sector’s transition to a low-carbon future.

Source: Amex GBT website

Joining the Avelia program enables Google to receive the credits for the amount of carbon emissions their purchased SAF reduces. Each credit represents a tonne of reduced carbon emissions. 

Google’s Flight Toward A Green Future

For years, Google has been investing in low-carbon initiatives that can help reduce global carbon emissions. From its eco-friendly routing to the green cloud, the tech giant commits to reaching carbon neutrality across its entire value chain. 

This recent move brings Google’s commitment to aviation. It’s joining other major companies that commit to decarbonize the sector such as insurance firm Aon and Bank of America. Major airlines are also onboard the program, including JetBlue, Delta, Japan Airlines, and Cathay Pacific, among many others. 

The tech major believes that SAF plays an important role in driving down aviation’s carbon emissions. Google’s climate and energy director said that signing up in Shell and Amex GBT’s SAF program “represents Google’s continued efforts to accelerate the global transition to a carbon-free future”.

Just like how the tech company leverages its eco-friendly Map feature, Google is also partnering with key industry players to help pilots pick flight paths with the lowest emissions. 

This is in line with its latest research initiative with American Airlines and Breakthrough Energy. They aim to harness the power of AI data mapping to tackle the impact of aircraft contrails on the climate. This can further help reduce airlines’ carbon footprint, alongside the use of SAF.

Why Promote SAF?

Compared to conventional jet fuel, SAF can cut a plane’s flight emissions by up to 80%. That’s because it can be made from renewable sources like crops, animal fats, waste oils, municipal waste, and captured carbon.

However, sustainable fuel comprises less than 0.1% of global aviation fuel available right now. Plus, it costs more than conventional jet fuels, about 2x to 8x higher. 

Thus, some are doubtful if there would be enough input to satisfy the growing demand for SAF and if its cost can be cut down to make it affordable for the airlines to use.

Despite these concerns, Amex GBT believes that SAF is critical in decarbonizing aviation, accounting for 90% of business travel emissions. This figure highlights the crucial need for corporations to address their air travel carbon footprint. 

Amex GBT has over 19,000 corporate clients globally and Shell Aviation has major airlines as customers. Combining their client base in forming Avelia, together they think that the program can help reduce costs and increase demand to scale SAF. Google’s signup helps them send a significant investment signal to the market. 

There are also important milestones happening in the sector that contribute to ramping up SAF and top-up demand. 

In April, JPMorgan Chase, Bank of America, Meta, Boston Consulting Group, and other major firms agreed to buy SAF credits. They join together as members of the Sustainable Aviation Buyers Alliance (SABA) aimed to boost demand for biofuel.

Also, earlier this year, United Airlines launched a $100 million investment vehicle for SAF. Last month, a climate tech startup Twelve revolutionized SAF production in the US by breaking ground in its commercial facility that turns captured carbon into biofuel.

By promoting sustainable aviation fuel and carbon reduction, Google, Shell Aviation, Amex GBT, and other companies embody the commitment of corporations to pursue a greener business aviation travel.

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Fueling the Future: Lone Cypress Energy Project Revolutionizes Blue Hydrogen

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In the heart of California’s Elk Hills Field, a hydrogen revolution is unfolding. The Lone Cypress Hydrogen Project is ramping up with a daily production capacity of 65 metric tonnes, positioning the company as the Western US’s blue hydrogen leader. 

The project isn’t just impressive; it’s a game-changing venture of Lone Cypress Energy Services. The initiative aims to convert methane emissions into blue hydrogen, an innovative approach that can potentially transform the energy sector. 

The project’s Front-End Engineering Design (FEED) study was successfully completed. It was a collaboration between Lone Cypress and its strategic partner Carbon TerraVault JV Holdco, LLC (CTV). CTV is a joint venture of California Resources Corporation (CRC) and Brookfield Renewable. 

The project will utilize carbon sequestration assets developed by CTV.

Championing a Greener Energy Sector

Lone Cypress Energy Services is an energy company specializing in hydrogen generation, waste-to-energy solutions, and traditional oil and gas midstream facilities, boasting 100 years old combined experience. 

California Resources Corporation is an energy and carbon management company spinning out from Occidental Petroleum in 2014. CRC currently holds the biggest mineral reserves in California, producing some of the US’s lowest carbon-intensity oil. 

Brookfield Renewable is a global leader in renewable power, operating a vast portfolio of hydroelectric, wind, solar, and storage facilities worldwide. They’re under Brookfield Asset Management, a global company with assets under management worth about $850 billion.

Greg Brooks, Lone Cypress’ President and CEO, emphasized the importance of the study, stating it validated both the technical and commercial viability of the project. He also expressed confidence in the project saying:

“…this facility will generate the most cost-competitive low-carbon liquid hydrogen in the Western United States.”

The Lone Cypress project is not just about energy but is also an economic dynamo. It will inject over $500 million into California’s local economy and bring benefits to the community. 

With 1,200+ future jobs during its construction phase, the project will significantly uplift employment in the state. The best part is that it will help in the global efforts in slashing carbon emissions. 

The Lone Cypress Hydrogen Project’s integrated carbon capture system is a marvel. It will store 500,000 metric tonnes of CO2 annually, which is like erasing 100,000 cars from the roads.

What’s Next for Lone Cypress Hydrogen Project?

Strategic location matters and Lone Cypress knows it. Sprawling over 300 acres at CRC’s Net Zero Industrial Park at Elk Hills Field, the project has the potential to be California’s hydrogen hub. The company ensures this through its FEDD study design to maximize impact and reach. 

Money flows to innovative efforts. Drawing a staggering $1.5 billion in investments, Lone Cypress has caught the eye of major energy stakeholders. Sustainability-focused funds are flowing through the project’s promise of a sustainable, profitable future.

CorEnergy Infrastructure Trust, for instance, also supported the development of the project with about $1 million.

The initiative also shows how collaboration among industry leaders is critical in advancing this kind of project. With over 10 industry players working together, including CRC and Brookfield Renewables, the project is a joint force of giants.

Market analysts are buzzing with predictions for Lone Cypress. They estimate that by 2026, the project will cater to up to 5% of California’s hydrogen demand. 

Following the FEED study, Lone Cypress has submitted the necessary permits and is in the process of finalizing agreements for hydrogen off-take from the facility. A final investment decision is due by this year-end, with the project beginning operations in the 4th quarter of 2025.

Harnessing state-of-the-art steam methane reformation technology for blue hydrogen production, Lone Cypress is pushing boundaries and setting new industry standards. 

The Race for Hydrogen Plants and Vehicles

Blue hydrogen refers to hydrogen gas that’s produced through steam methane reforming (SMR), a type of natural gas reforming process. The key characteristic of blue hydrogen is that producing it uses fossil fuels, primarily methane, as the input.

The Steam Methane Reforming Process

Source: energypost.eu website

The Lone Cypress project is the first carbon sequestration project under CRC’s “carbon terra vault” initiative, aiming to capture and store 200 million metric tons of CO2 at an estimated cost of $2.5 billion. This initiative is in partnership with Brookfield Renewable. 

Despite its modest size, this project using a hydrogen plant is notable for its approach and meaningful for California Resources’ rollout of carbon capture and sequestration technology. According to them, it will be the first of many projects to come. 

But CRC is not the only major player in the field. Two other oil giants are considering blue hydrogen facilities to generate hydrogen. Texas-based ExxonMobil Corp also unveiled last March its plan to build a blue hydrogen plant at its facility in Baytown.

It’s worth noting that blue hydrogen is part of a broader conversation around transitioning to cleaner energy sources and reducing carbon emissions. Many people are not aware that the global hydrogen market is worth $120 billion.

S&P Global estimates blue hydrogen’s global production capacity will be over 3 million metric tons a year in 2028.

Source: S&P Global

The idea behind blue hydrogen is to mitigate the emissions of producing hydrogen, making it more eco-friendly compared to conventional hydrogen production, though it still relies on fossil fuels, unlike green hydrogen. Green hydrogen is produced using renewable power so it’s emission-free.

Some experts consider blue hydrogen as a transitional solution that can help industries shift away from high-carbon energy sources while infrastructure for green hydrogen is being developed and scaled up. Here’s how green hydrogen differs from blue hydrogen.

Source: Iberdrola SA website

In other Hydrogen news, First Hydrogen (TSXV: FHYD),  is one of those companies championing the use of green hydrogen in producing hydrogen-fuel-cell-powered vehicle (FCEV). 

The award-winning fleet management provider Rivus trialed First Hydrogen’s FCEV, concluding that its range is unbeatable (700 miles or 1126 km) and refueling is very quick, taking below 5 minutes. 

These major milestones in the industry, particularly on Lone Cypress hydrogen project and First Hydrogen’s record-breaking FCEV, ignite the hydrogen revolution. They show that transitioning to cleaner, greener energy sources is possible and is starting to unfold.

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The Fuel Cell Vehicle Market Is Growing – Fast

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Just as the Obama administration claimed back in 2009, fuel cell technology was over a decade away.

But that decade came and went.

Now, 14 years later, fuel cell technology is far more economical and scalable for commercial use.

The cost of FCVs have plunged over 65% over the last decade – especially for buses – on the back of innovations and production improvements.

The increased affordability for hydrogen powered FCVs now makes it a much more attractive fuel source for everyday use.

Because of this, the global FCV market is set to grow from $2.5 billion in 2022 to over $30 billion by 2032 – which is more than 25% compounded annually.

This rapid growth in FCVs has many tailwinds behind it.

Stricter vehicle emission regulations.

Government investments and subsidies in the development of FCVs and green hydrogen.

The growing adoption of passenger FCVs in Asia – especially Japan and South Korea.

The transition for companies shifting towards FCV’s which offer greater efficiency than electric vehicles – especially for long-haul and bulk transportation.

As costs have reduced for commercial use, different administrations around the world have set ambitious targets to increase the number of FCVs on the roads.

And that means more hydrogen is required to power these FCVs.

Companies And The “Smart Money” Are Diving Into Hydrogen

With governments pushing billions into green hydrogen infrastructure and investment, companies and venture capital (VCs) have already started shifting towards this new market.

For instance, VC firms invested $2.6 billion in 192 hydrogen startups last year.

Since 2014, the number of annual VC hydrogen deals has more than tripled as PE deal counts in hydrogen-related companies quadrupled.

Major international companies – struggling to reduce their carbon output – have already been striking green hydrogen deals left and right.

Last year, Amazon signed an agreement with Plug Power to supply 11,000 tons per year of green hydrogen for its transportation and building operations starting in 2025.

Meanwhile, around the same time, Walmart struck a deal with Plug Power to supply enough green hydrogen to help fuel as many as 9,500 machines across their distribution and fulfilment centers.

This is just the tip of the iceberg of companies investing in green hydrogen and FCVs.

And while this trend is set to accelerate amid decarbonization enforcement, hydrogen-related companies are getting huge amounts of government subsidies to make sure they can deliver.

Just last month, in July 2023, Nikola Corporation – a global leader in zero-emissions transportation and energy infrastructure – received $58.2 million in grants to support seven hydrogen refueling stations located along the California freight corridors.

Let’s Talk About California

California has spearheaded the push into hydrogen – subsidizing and aggressively building-out of the state’s hydrogen infrastructure in recent years.

According to S&P Global – by the end of 2022, there were about 62 hydrogen refueling stations across the state collectively capable of supporting a fleet of about 51,000 light-duty FCEVs. A 2018 executive order issued by former California Governor Jerry Brown set a target to expand the network to 200 stations by 2025.

Due to this investment, California’s average daily hydrogen dispensed per quarter has increased more than 7500% in the last few years (since 2016).

With California being the largest state per GDP ($3.5 trillion economy – which is even bigger than most developed countries), this is setting the trend for the rest of the U.S. in hydrogen.

The only issue right now crimping hydrogen growth from compounding even faster is that there’s still a limited amount of reliable hydrogen supply.

Last year, the California Fuel Cell Partnership stressed the need to shift the market’s focus from building refueling stations to ensuring stations are not frequently running out of supply.

This has become the biggest thorn in the side of the hydrogen market – there’s just not enough green hydrogen available.

This has spurred further development and investment into scaling-out green hydrogen.

But what’s most important here for green hydrogen is just how much cheaper it’s becoming over the next decade.

McKinsey reported that at a production cost of approximately $2 per kilogram, clean hydrogen will become very competitive in many sectors.

It will soon cost less to produce green hydrogen (leaving no greenhouse gas byproducts) than the current grey (dirty) hydrogen method.

Further government subsidies and support are critical to lowering these costs, which they’re fully committed to achieving.

Hydrogen Is Ready To “Combust”

With the macro agenda pushing more clean energy, hydrogen is set to play a crucial role in achieving these lofty net-zero targets.

Meanwhile, the micro picture has shown a significant reduction in costs for both fuel cells and green hydrogen production.

As economies of scale come into play, advancements in technology continue, and investments pour into research and infrastructure, the era of hydrogen-powered transportation, industry, and energy generation is right in front of us.

The inflection point of favorable factors – from greater environmental awareness to policy-driven incentives – has paved the way for hydrogen’s widespread adoption.

The transformative potential of hydrogen is clear: powering vehicles with water vapor emissions, stabilizing renewable energy grids, decarbonizing heavy industries, and revolutionizing our energy landscape.

This shift is no longer a distant possibility; it’s a tangible reality gaining momentum by the day.

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

Carboncredits.com receives compensation for this publication and has a business relationship with any company whose stock(s) is/are mentioned in this article

Additional disclosure: This communication serves the sole purpose of adding value to the research process and is for information only. Please do your own due diligence. Every investment in securities mentioned in publications of carboncredits.com involve risks which could lead to a total loss of the invested capital.

Please read our Full RISKS and DISCLOSURE here.

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The World Is Getting Too Warm, Too Fast

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Regardless of the anti-climate change propaganda that the fossil fuel companies were pushing, the world has seen a staggering increase in average temperature.

According to NASA, the global average temperature has risen 0.89 degrees Celsius by 2022 compared to the 1950’s – accelerating sharply after the 1980s.

In fact, global temperatures recently hit their highest daily average ever recorded in July 2023 – reaching 17.24 degrees Celsius.

Such extreme global temperatures have brought on heatwaves, wildfires, and heavy rainfalls worldwide, causing havoc.

According to the international think tank – The Institute for Economic and Peace (IEP) – climate migration is expected to surge in the coming decades, with projections that 1.2 billion people may be displaced globally by 2050 due to a warming climate.

Because of this staggering rise in climate temperatures, governments around the world are just now beginning to make up for lost time by piling on new policies – regardless of the costs – to prevent further climate change disruptions.

In the previous year, President Biden issued an executive order aiming to reduce emissions by 65% by 2030, with the ultimate goal of achieving a net-zero U.S. economy by 2050. Additionally, 24 U.S. states, accounting for 40% of the entire economy, have established their own net-zero objectives.

The European Union has committed to achieving net-zero emissions by 2050 and recently introduced additional measures, including a proposal to eliminate 90% of carbon dioxide (CO2) emissions from the trucking and public transportation sector by 2040.

China, a substantial contributor to emissions, publicly declared in mid-2022 its ambition to reach net-zero status by 2060. To realize this objective, the country has outlined a concrete three-step roadmap.

Even though this is a huge step in the right direction, albeit a bit too late amid record breaking temperatures, there’s still much more that needs to be done for governments to hit their ambitious net-zero targets in the coming years.

According to McKinsey, the U.S. must cut emissions by 6% per year – which is roughly 10-times faster than the last decade’s average annual reduction – to hit their 2030 targets alone. That’s a 50% reduction over the next eight years.

Governments Are Putting Money Where Their Mouth Is

Since governments around the world are starting later than they should have, they’re trying to make up for it by doling out trillions to get the clean energy infrastructure built out, as well as subsidizing households, to transition faster to cut greenhouse gas emissions.

Between 2020 and April 2023, global government clean energy support has risen 10-fold – and energy affordability spending has risen nearly 4-fold.

For instance, President Biden’s Inflation Reduction Act (IRA) contained nearly $400 billion in energy and climate provisions – including tax-credits for electric vehicles (EVs) and clean energy projects.

And this has revitalized hydrogen in becoming a key power source, which will be crucial in the race against climate change.

In fact, the White House made waves recently by announcing a historic $7 billion funding program by the Department of Energy to help spur regional clean hydrogen hubs across the entire nation.

The Macquarie group claims that President Biden has “almost guaranteed green hydrogen’s future” as a major energy source.

And this is just in the U.S.

On the other side of the world, Europe implemented it’s EU-wide Hydrogen Strategy program in July 2020 to ensure the transition in Europe’s energy mix to reach 13-20% by 2050.

This was followed by the formation of the European Hydrogen Bank in 2022 to fund $3 billion euros worth of support and investments connected to hydrogen market.

“Hydrogen is today enjoying unprecedented momentum. The world should not miss this unique chance to make hydrogen an important part of our clean and secure energy future” – said Dr Fatih Birol, Executive Director at the International Energy Agency (IEA).

As the push for cleaner, zero-emission, fuel sources have become government priorities, hydrogen demand is set to play a crucial role.

From transportation and industry to powering and heating homes.

So as the race against climate change finally ramps up, the hydrogen market is set to grow extremely fast.

And just in time as fuel cell vehicle and green hydrogen product costs have plunged.

Marking the beginning of a new era in fuel cells.

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

Carboncredits.com receives compensation for this publication and has a business relationship with any company whose stock(s) is/are mentioned in this article

Additional disclosure: This communication serves the sole purpose of adding value to the research process and is for information only. Please do your own due diligence. Every investment in securities mentioned in publications of carboncredits.com involve risks which could lead to a total loss of the invested capital.

Please read our Full RISKS and DISCLOSURE here.

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The Discovery of Hydrogen as a Power Source was Over 200 Years Ago

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In the late 18th century, hydrogen was first identified as a unique gas by the British scientist – Henry Cavendish.

He referred to it as “inflammable air” due to its highly explosive properties.

At the same time, the French chemist – Antoine Lavoisier – was also studying this unique element.

It was Lavoisier who is credited with naming “hydrogen” in 1783 – basing it from the Greek word’s “hydro” (meaning water) and “genes” (meaning forming) because hydrogen gas forms water when combined with oxygen.

These two men were essentially the pioneers of hydrogen. And set the foundation for future scientists to find creative ways to use it.

Later in 1839, the Welsh scientist – Sir William Grove – discovered the early principles of fuel cells and how hydrogen and oxygen would generate electricity and produce only water as a byproduct.

In fact, he developed the first working fuel cell nearly 200 years ago – known as Grove’s “Gas” Battery.

Grove even installed this early-fuel cell to power a small carriage, creating the first fuel-cell powered vehicle.

And even though this was a groundbreaking discovery, the boom in petroleum and gasoline took off during the second industrial revolution (1870 to 1970) on the back of the internal combustion engine for automobiles.

Petroleum-based fuels offered lower costs, established infrastructure (refiners, gas stations, etc), and economies of scale that hydrogen fuel cells couldn’t.

Thus the gas-powered automobile boom spread like wildfire, and hydrogen powered automobiles were left behind.

But they weren’t forgotten…

One Giant Leap For Mankind: NASA Rediscovers Hydrogen Power

After years of researching fuel cell technology, NASA began using it to power spacecrafts and space shuttles in the 1960s due to its high efficiency and the zero-emissions (which was essential in the closed environments of space missions).

The Apollo Space Missions saw fuel-cells played major parts in powering spacecrafts – including the historic Apollo 11 mission in July 1969 when Neil Armstrong landed on the moon.

Not long after witnessing fuel cells being used to power spacecrafts, the automobile industry began showing much more interest.

See, the 1970’s was a critical year for auto manufacturers in two big ways.

The oil-embargos – when Saudi Arabia and OPEC curbed oil exports to the U.S. – saw gasoline prices soar over 600% between 1973 and 1980.
And there were growing concerns about environmental damage and global warming caused by greenhouse gas emissions (GHG) from fossil fuels.

These two things sparked interest in alternative fuels – including hydrogen.

But of course, oil and fossil fuel companies – such as coal – didn’t like this.

And throughout the same period, these companies were pushing propaganda that climate change wasn’t happening.

For example, in 1991, Informed Citizens for the Environment, a front group of coal and utility companies announced that “Doomsday is cancelled” and asked, “Who told you the earth was warming … Chicken Little?”

Regardless, governments and automobile companies began aggressively researching and exploring fuel cells as solutions for reducing dependence on gasoline and curbing emissions.

Throughout the 1980s and 1990s, significant development efforts were made to improve fuel cells and hydrogen storage methods.

Automakers and governments began investing in hydrogen powered vehicle prototypes and projects.

In 1998, Iceland announced plans to create a hydrogen economy – converting all public transportation vehicles to fuel cells.
In 1999, Germany introduced the first commercial hydrogen refueling station.

Even President George W. Bush became so bullish on hydrogen cars that in 2003, he announced $1.2 billion for research and investment into hydrogen to help ‘lead the world in developing clean, hydrogen-powered automobiles.’

“With a new national commitment, our scientists and engineers will overcome obstacles to taking these cars from laboratory to showroom so that the first car driven by a child born today could be powered by hydrogen, and pollution-free,” President Bush said in his 2003 State of the Union address.

It looked like this was going to be the dawn of the era of hydrogen powered vehicles and infrastructure.

And while progress in hydrogen powered cars was ramping up on the back of these government incentives, it was cut short in 2009.

The Obama administration slashed the hydrogen research funding, claiming that the technology wouldn’t be practical for another 10 to 20 years. Instead, they focused on electric vehicles (EVs) and hybrids.

And this posed a problem…

Because while hydrogen vehicles were becoming more commercially efficient, there was still extremely limited infrastructure behind it.

For example, hardly any investment in fueling stations or hydrogen transportation had been made to power the small number of fuel cell vehicles on the road.

This prevented hydrogen and fuel cell vehicles (FCVs) from spreading as the combustion engine did 100 years prior.

But this all changed since 2020…

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

Carboncredits.com receives compensation for this publication and has a business relationship with any company whose stock(s) is/are mentioned in this article

Additional disclosure: This communication serves the sole purpose of adding value to the research process and is for information only. Please do your own due diligence. Every investment in securities mentioned in publications of carboncredits.com involve risks which could lead to a total loss of the invested capital.

Please read our Full RISKS and DISCLOSURE here.

The post The Discovery of Hydrogen as a Power Source was Over 200 Years Ago appeared first on Carbon Credits.

Occidental to Buy DAC Innovator Carbon Engineering for $1.1B

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Occidental Petroleum revealed plans to acquire Canadian Direct Air Capture supplier Carbon Engineering through its subsidiary Oxy for $1.1 billion. 

The oil major’s Oxy Low Carbon Ventures subsidiary advances technologies and solutions that economically grow the company while reducing emissions. 

Carbon Engineering (CE) provides climate solutions focusing on deploying large-scale direct air capture (DAC) technology. It captures carbon directly from the atmosphere and stores it in geologic formations or uses it to make valuable products. 

Accelerating DAC Deployment and Technology Breakthroughs

Occidental and CE have been working on DAC technologies for almost five years now. The buyout will allow Occidental to establish multiple direct air capture sites to deliver climate change solutions.

DAC is Occidental’s low-carbon strategy toward its net zero goal. Last year, it signed a net zero oil deal with South Korean refiner SK Trading.

Occidental plans to build about 100 DAC plants to rapidly advance the technology breakthroughs and ramp up deployment. That way the energy giant can help make DAC a cost-effective global carbon removal solution.

Buying out Carbon Engineering is a good opportunity to make that happen while aligning with Occidental’s net-zero strategies. CE’s DAC technology applies standardized and proven processes. 

The image shows how CE’s DAC technology works. It uses giant fans powered by solar energy to suck in CO2. The liquid sorbents draw in carbon that will be heated to get pure CO2, which would be injected underground or used in making valuable products. 

Carbon Engineering DAC Process

Highlighting the importance of their agreement in scaling up DAC, Occidental President and CEO Vicki Hollub said:

“Together, Occidental and Carbon Engineering can accelerate plans to globally deploy DAC technology at a climate-relevant scale and make DAC the preferred solution for businesses seeking to remove their hard-to-abate emissions.”

Hollub added that it will bring new revenue streams for Occidental, adding to its profitability. 

Occidental will buy CE’s equity for cash in 3 annual payments, with the first due when their agreement turns official. 

Their deal will close before this year closes, subject to regulatory approvals in both the United States and Canada. After this Carbon Engineering would be a wholly owned subsidiary of Oxy Low Carbon Ventures. Its R&D activities and Innovation Center will remain as is in BC, Canada.

The DAC company’s personnel will also continue their usual DAC tech development efforts while working closely with Occidental and 1PointFive to provide DAC solutions.

1PointFive is a Carbon Capture, Utilization, and Sequestration (CCUS) platform aimed at curbing global warming by deploying climate solutions. And this particularly includes CE’s DAC solution. 

A Growing Support for DAC 

Carbon Engineering CEO Daniel Friedmann expressed their appreciation of the acquisition as the next chapter in their journey. The deal shows their commitment to “accelerate implementation of DAC-based climate solutions in the U.S. and around the world.”

The deal comes as part of the US government’s intent to employ DAC, alongside other carbon removal technologies, to reach net zero emissions by 2050. 

Just last week, the US Department of Energy made a huge bet on DAC technology by planning to spend over $1.2 billion on two DAC projects in Texas and Louisiana. Together, these facilities can potentially remove over 2 million metric tons of carbon emissions each year.

Some of the dollars will be under Oxy’s hands as it manages the West Texas-based DAC project called Stratos. 

1PointFive is building Stratos in Ector County, Texas. Occidental and CE are adapting the project’s front-end engineering and design study for a planned DAC facility at Kleberg County. This new plant will be part of the DAC Hub that won DOE’s federal grant.

Employing Carbon Engineering’s DAC technology, Stratos would be the largest DAC plant worldwide in 2025. The other recipient of the grant is Climeworks-led Project Cypress in Louisiana. Climeworks said its DAC hub construction will start as soon as possible, targeting 2025 or 2026. 

Right now, the US government is pioneering massive support programs for advancing DAC and scaling it up. But other countries like the UK and EU are keeping pace with their recent announcements of DAC funding programs. 

The world needs to remove 1 billion tons or 1 gigatonne of CO2 annually by 2030 to prevent catastrophic disasters. Though it can’t deliver such a big amount of carbon removal, DAC is one option entities have at their disposal.

As governments and industries prioritize DAC, Occidental’s vision aligns with the growing support for innovative carbon capture solutions worldwide.

The post Occidental to Buy DAC Innovator Carbon Engineering for $1.1B appeared first on Carbon Credits.