Tag Archives: carbon sources

The $22 Trillion Global Carbon Market

Two of the world’s biggest oil companies, Royal Dutch Shell  and BP already have significant carbon-emissions trading arms, thanks to a relatively well-developed carbon market in Europe. Big carbon emitters such as steel producers receive emission allowances, and can buy more to stay under European emissions guidelines. Companies that fall below those limits can sell their excess carbon-emissions allowances.

Carbon traders get in the middle of those transactions, seeking to profit from even small moves in the price of carbon and sometimes betting on the direction of prices. The value of the world’s carbon markets—including Europe and smaller markets in places such as California and New Zealand—grew 23% last year to €238 billion, equivalent to $281 billion.

That is small compared with the world’s multitrillion-dollar oil markets and to other heavily traded energy markets, such as natural gas or electricity. But growth potential exists, the industry says. Wood Mackenzie, an energy consulting firm, estimates a global carbon market could be worth $22 trillion by 2050… An experienced carbon trader’s base salary can be roughly $150,000 to $200,000, although a lot of compensation occurs via bonuses, traders said…. BP’s overall annual trading profits were between $3.5 billion and $4 billion during the past two years, according to a person familiar with the matter.

Excerpts from Sarah McFarlane, Energy Traders See Big Money in Carbon-Emissions Markets, WSJ, Sept. 9, 2021

Fossil-Free in 2026

Norrland (in Sweden) abounds in hydropower. Power that is cheap and—crucially—green, along with bargain land and proximity to iron ore, is sparking an improbable industrial revolution, based on hydrogen, “green” steel and batteries. SSAB, a steelmaker, is poised to deliver its first consignment of “eco-steel” from a hydrogen-fuelled pilot plant in Lulea, a northern city. 

Traditionally, to make steel, iron ore must be melted at high temperatures and reduced from iron oxide to iron, a process that typically involves burning fossil fuels, releasing huge amounts of carbon dioxide. Replacing them with hydrogen eliminates more than 98% of the carbon dioxide normally released. The hydrogen is made by electrolysing water, using electricity produced by hydro-power. This approach involves almost no carbon-dioxide emissions at all…..

Northern Sweden’s steelmaking leaps are being emulated elsewhere in Europe, in response to similar environmental pressures which will only increase if, as looks very likely, Germany’s Greens enter government after the election in September 2021. Europe produces a still significant 16% of the world’s steel. Big producers in Germany and Poland, where the industry is mostly coal-based and very dirty, are nervy. Even neighbouring Norway is in danger of losing out. It too has the gift of rich renewable-energy resources, but underinvestment means there may soon not be enough of this green electricity to meet the demands of both households and industry.

Excerpts from Green steel: Plentiful renewable energy is opening up a new industrial frontier, Economist, May 15, 2021

Can We Change Path? Saving Forests and Cutting Carbon

No ecosystem is more important in mitigating the effects of climate change than tropical rainforest. And South-East Asia is home to the world’s third-biggest patch of it, behind the Amazon and Congo basins. Even though humans release carbon from these forests through logging, clear-felling for agriculture and other disruptions, some are so vast and fecund that the growth of the plants within them absorbs even more from the atmosphere. The Congo basin, for instance, locks up 600m tonnes of carbon a year more than it releases, according to the World Resources Institute (WRI), an international NGO that is equivalent to about a third of emissions from all American transport.

In contrast, such is the extent of clearing for plantations in South-East Asia’s rainforests, which run from Myanmar to Indonesia, that over the past 20 years they have turned from a growing carbon sink to a significant source of emissions—nearly 500m tonnes a year. Indonesia and Malaysia, home to the biggest expanses of pristine forest, have lost more than a third of it this century. Cambodia, Laos and Myanmar, relative newcomers to deforestation, are making up for lost time.

The Global Forest Watch, which uses satellite data to track tree cover, loss of virgin forest in Indonesia and Malaysia has slowed for the fourth year in row—a contrast with other parts of the world…The Leaf Coalition, backed by America, Britain and Norway, along with such corporate giants as Amazon, Airbnb, and Unilever, aims to create an international marketplace in which carbon credits can be sold for deforestation avoided. An initial $1bn has been pledged to reward countries for protecting forests. South-East Asia could be a big beneficiary,

Admittedly, curbing deforestation has been a cherished but elusive goal of climate campaigners for ages. A big un initiative to that end, called REDD+, was launched a decade ago, with Indonesia notably due for help. It never achieved its potential. Projects for conservation must jump through many hoops before approval. The risk is often that a patch of forest here may be preserved at the expense of another patch there. Projects are hard to monitor. The price set for carbon under the scheme, $5 a tonne, has been too low to overcome these hurdles.

The Leaf Initiative would double the price of carbon, making conservation more attractive. Whereas buyers of carbon credits under REDD+ pocketed profits from a rise in carbon prices, windfalls will now go to the country that sold the credits. Standards of monitoring are much improved. Crucially, the scheme will involve bigger units of land than previous efforts, the so-called jurisdictional approach. That reduces the risk of deforestation simply being displaced from a protected patch to an unprotected one.

Excerpts from Banyan: There is hope for South-East Asia’s beleaguered tropical forests, Economist, May 1, 2021

Dumping Carbon in the Seabed

Oil companies have for decades made money by extracting carbon from the ground. Now they are trying to make money putting it back. Energy giants such as Exxon Mobil and Royal Dutch Shell are pushing carbon capture and storage (CCS)—where carbon is gathered and buried underground—as part of a drive to reduce both their own and their customers’ emissions. Executives say the service could become a new source of income when the industry is grappling with how to adapt to a lower-carbon economy.

Oil companies have long captured carbon from their operations, albeit mostly to produce more oil. Now they want to retool that skill as a service they can sell to heavy-polluting industries like cement and steel, burying their carbon in the ground indefinitely for a fee, rather than releasing it into the atmosphere. Yet critics question the environmental benefits and high cost of such projects.

In 2021, Shell, Total and Equinor launched a joint venture to store carbon in a rock formation thousands of feet beneath the seabed off the coast of Norway. The state-backed Northern Lights project is set to be the first time companies outside the oil industry will be able to pay to have their carbon gathered and stored. Most carbon-storage projects rely on government funding. Norway is covering about 80% of the $1.6 billion cost of the Northern Lights project, with the rest split equally between Shell, Equinor and Total.

Exxon has said it plans to form a new business unit to commercialize carbon capture and storage, forecasting it could become a $2 trillion market by 2040. Chevron has formed partnerships on storage projects, while BP is codeveloping storage projects in the U.K. and Australia. Oil executives’ sales pitch to carbon-intensive companies: We will provide your energy, then take back the carbon to minimize your footprint. Carbon capture and storage iss becoming a business rather than just a solution. 

The U.S. offers companies a tax credit of as much as $50 a metric ton of carbon captured, while the U.K., Norway and Australia have collectively committed billions of dollars of funding for carbon-capture projects. But There are  concerns about whether storage sites could leak carbon. In Europe, public resistance to land-based storage has led to the use of aquifers and depleted gas fields in the North Sea….In the Norway project, carbon will be transported by ship around the bottom of the country before being pumped offshore via a 68-mile pipeline and then injected into an aquifer under the seabed. BP is working on a similar concept for a project it will operate in northeast England, where carbon will be collected from a gas-power plant and various industrial sites, then stored under the North Sea. “We’ll capture the carbon, we’ll take it offshore, we’ll stuff it underground,” BP Chief Executive Bernard Looney recently said of the project. “Taking the carbon back is what I like to describe it as.”

Excerpts from Sarah McFarlane, Oil Giants Turn to Carbon Storage, Apr. 20, 2021

How Mining Waste Can Help us Deal with Climate Change

Every year, mining and industrial activity generates billions of tons of slurries, gravel, and other wastes that have a high pH.

These alkaline wastes, which sit either behind fragile dams or heaped in massive piles, present a threat to people and ecosystems. But these wastes could also help the world avert climate disaster. Reacting these wastes with carbon dioxide (CO2) from the air solidifies them and makes them easier to handle.

At the same time, carrying out this type of an operation on a global scale could trap between 310 million to 4 billion tons of CO2 annually, according to recent surveys. That could provide the world with a much needed means of lowering atmospheric CO2.

But there are major hurdles. Governments will need to offer incentives for mineralization on the massive scale needed to make a dent in atmospheric carbon. And engineers will need to figure out how to harness the wastes while preventing the release of heavy metals and radioactivity locked in the material…

If regulators verified mines and other alkaline waste producers as CO2 sequestration sites…incentives would skyrocket, companies could claim tax benefits, and industry might start to tackle climate change on the grand scale that’s necessary.

Excerpt from Robert F. Service, The Carbon Vault, Science, Sept. 4, 2020

Banning Gasoline Cars: Better than subsidies and taxes

More than a dozen countries say they will prohibit sales of petrol-fueled cars by a certain date. On September 23rd, 2020,  Gavin Newsom, California’s governor, pledged to end sales of non-electric cars by 2035. Such bans may look like window-dressing, and that could yet in some instances prove to be the case. But in the right circumstances, they can be both effective and efficient at cutting carbon.

Fully electric vehicles are not yet a perfect substitute for petrol-consuming alternatives. They are often more expensive, depreciate faster, and have a lower range of travel and more limited supporting infrastructure, like charging stations or properly equipped mechanics. But the number of available electric models is growing, and performance gaps are closing. A recent analysis concludes that in such conditions—when electric vehicles are good but not perfect substitutes for petrol-guzzlers—a ban on the production of petrol-fueled cars is a much less inefficient way to reduce emissions than you might think.

If electric vehicles were in every way as satisfactory as alternatives, it would take little or no policy incentive to flip the market from petrol-powered cars to electric ones. If, on the other hand, electric cars were not a good substitute at all, the cost of pushing consumers towards battery-powered vehicles would not be worth the savings from reduced emissions. Somewhere in between those extremes, both electric and petrol-powered cars may continue to be produced in the absence of any emissions-reducing policy even though it would be preferable, given the costs of climate change, for the market to flip entirely from the old technology to the new. Ideally, the authors reckon, this inefficiency would be rectified by a carbon tax, which would induce a complete transition to electric vehicles. If a tax were politically impossible to implement, though, a production ban would achieve the same end only slightly less efficiently—at a loss of about 3% of the annual social cost of petrol-vehicle emissions, or about $19bn over 70 years… A shove may work as well as a nudge. 

Excerpts from Outright bans can sometimes be a good way to fight climate change, Economist, Oct. 3, 2020

The Green Climate Fund and COVID-19

 The Green Climate Fund has promised developing nations it will ramp up efforts to help them tackle climate challenges as they strive to recover from the coronavirus pandemic, approving $879 million in backing for 15 new projects around the world…The Green Climate Fund (GCF) was set up under U.N. climate talks in 2010 to help developing nations tackle global warming, and started allocating money in 2015….

Small island states have criticised the pace and size of GCF assistance…Fiji’s U.N. Ambassador Satyendra Prasad said COVID-19 risked worsening the already high debt burden of small island nations, as tourism dived…The GCF  approved in August 2020 three new projects for island nations, including strengthening buildings to withstand hurricanes in Antigua and Barbuda, and installing solar power systems on farmland on Fiji’s Ovalau island.

It also gave the green light to payments rewarding reductions in deforestation in Colombia and Indonesia between 2014 and 2016. But more than 80 green groups opposed such funding. They said deforestation had since spiked and countries should not be rewarded for “paper reductions” in carbon emissions calculated from favourable baselines…. [T]he fund should take a hard look at whether the forest emission reductions it is paying for would be permanent.  It should also ensure the funding protects and benefits forest communities and indigenous people…

Other new projects included one for zero-deforestation cocoa production in Ivory Coast, providing rural villages in Senegal and Afghanistan with solar mini-grids, and conserving biodiversity on Indian Ocean islands.  The fund said initiatives like these would create jobs and support a green recovery from the coronavirus crisis.

Excerpts from Climate fund for poor nations vows to drive green COVID recovery, Reuters, Aug. 22, 2020

Don’t Cut that Tree!

A revolutionary new approach to measuring changes in forest carbon density has helped scientists determine that the tropics now emit more carbon than they capture, countering their role as a net carbon “sink.”*

“These findings provide the world with a wakeup call on forests,” said scientist Alessandro Baccini, the report’s lead author….Forests are the only carbon capture and storage ‘technology’ we have in our grasp that is safe, proven, inexpensive, immediately available at scale, and capable of providing beneficial ripple effects—from regulating rainfall patterns to providing livelihoods to indigenous communities.”

Using 12 years (2003-2014) of satellite imagery, laser remote sensing technology and field measurements, Baccini and his team were able to capture losses in forest carbon from wholesale deforestation as well as from more difficult-to-measure fine-scale degradation and disturbance …from smallholder farmers removing individual trees for fuel wood. These losses can be relatively small in any one place, but added up across large areas they become considerable.

[T] he researchers discovered that tropics represent a net source of carbon to the atmosphere — about 425 teragrams of carbon annually – which is more than the annual emissions from all cars and trucks in the United States.

Excerpts from New approach to measuring forest carbon density shows tropics now emit more carbon than they capture, Woods Hole Research Institute Press Release, Sept. 28, 2017

*Tropical forests are a net carbon source based on aboveground measurements of gain and loss by A. Baccini et al., Science, Sept. 28, 2017