Sustainability watch: carbon capture, e-fuels, and high seas

Swiss-based trading house Mercuria is investing USD 500 million into a new nature-based solutions business as it seeks to step up its involvement in the fast-growing market for voluntary carbon offsets. The new platform will fund projects that plant trees, prevent deforestation and support biodiversity and sustainable forest management. The initiative is part of a trend of trading houses becoming more involved in carbon markets — including the market for voluntary offsets, which are less centralised and less standardised than the formal compliance markets for carbon offsets. Demand for voluntary offsets is expected to grow, as companies will need them to reach net zero targets.

Climate tech solutions startup Andes announced the completion of a USD 30 million Series A funding round, aimed at enabling the company to expand its microorganism-based carbon removal solution and commercialise its carbon removal credits. The company said that the new funding will enable it to offer its carbon removal credits to organisations of all sizes, expand partnerships with farmers, and continue the development of its microorganism technology.

Carbon markets hold steady amid energy cost surges, finds the International Carbon Action Partnership (ICAP)’s Emissions Trading Worldwide Status Report for 2023. Prices in the world’s emissions trading systems ended 2022 largely unchanged on the year. The global energy crisis pushes governments to double-down on decarbonisation efforts, with emissions markets playing a key role. ETS auctions raised USD 63 billion globally in 2022, a new record. Instead of retreating from climate ambitions as economic pressures piled up, policymakers around the world doubled down on their commitments and accelerated plans to decarbonise, using their ETSs to help, finds the 10th edition of ICAP’s Emissions Trading Status Report.

Solar industry-focused recycling startup SOLARCYCLE announced that it has raised USD 30 million, including equity and infrastructure financing, with proceeds aimed at scaling the company’s solar panel recycling capacity, and expanding its materials remanufacturing capabilities. Founded last year “to create a more sustainable, domestic supply chain for the solar industry,” SOLARCYCLE has developed proprietary technology capable of extracting over 95% of the valuable materials in solar panels, including aluminium, glass, copper, silver, and silicon, for return into the panel supply chains, and to recycle or repurpose panels currently in use.

Brookfield Asset Management Ltd. aims to raise about USD 20 billion for its second fund dedicated to investing in the global transition to clean energy from fossil fuels. Brookfield’s plans deepen its low-carbon bet after raising USD 15 billion for its first Brookfield Global Transition Fund, overseen by former Bank of England Governor Mark Carney and Connor Teskey, chief executive officer of Brookfield Renewable. Green-focused investors see renewable-energy firms as poised to surge amid turmoil in global energy markets after Russia invaded Ukraine and a rush to meet commitments to limit climate change.

Portugal's largest utility, EDP, said it would invest EUR 25 billion over four years with the aim of nearly doubling its installed renewable energy capacity to 33 GW by 2026. In its strategic plan through 2026, EDP said EUR 21 billion would be invested by its wind and solar unit EDP Renovaveis - the world's fourth-largest renewable energy producer - and EUR 4 billion euros would be directed towards electricity grids. This would increase average annual investment to EUR 6.2 billion euros, 30% above what it projected in a previous plan that ran to 2025.

Marubeni Corp has agreed to study clean hydrogen production in Saudi Arabia together with the kingdom's sovereign wealth fund, the Japanese trading house said, as Riyadh is exploring cleaner energy to cut its reliance on oil. Saudi Arabia, a leading oil-producing nation and a key player in the Organisation of the Petroleum Exporting Countries, is looking to add other types of energy sources, including cleaner fuels and renewables, to diversify its economy.

Rural communities and tribal nations lacking access to reliable energy will begin receiving more than USD 300 million to develop clean and affordable energy sources, the US Energy Department said. A bipartisan infrastructure law signed by President Joe Biden in 2021 earmarked USD 300 million for remote communities of fewer than 10,000 residents plus USD 15 million for a prize competition to help them build capacity for new energy systems. The announcement means communities can now apply for federal cost-share funding from USD 5 million to USD 10 million for single-site demonstration projects and for up to USD 100 million for multi-community projects to increase energy affordability and build climate resilience.

The European Union proposed a road map for how cars running on e-fuels could be considered carbon neutral in a bid to convince Germany to stop blocking a planned ban on combustion engines. Brussels and Berlin are locked in a standoff over the ban, which is a key pillar of the bloc’s green strategy. Germany raised last-minute objections — out of concern for its all-important car industry — and the risk is that without a compromise the landmark legislation could unravel completely. The European Commission promised to publish a statement that would include timelines and outline regulatory solutions essential for allowing new combustion-engine vehicles running on e-fuels to be registered after the ban is due to take effect in 2035. New regulations regarding cars using e-fuels would only be offered after member states approved the ban on combustion engines, a step Germany has been blocking. The commission, the EU’s executive arm, stopped short of Berlin’s request to propose additional legislation. Germany has yet to signal if it agrees with the terms.

Volkswagen AG unveiled an affordable electric vehicle that’s a couple of years away from production, putting Europe’s largest carmaker on a collision course with Tesla. The concept previews a car costing less than EUR 25,000 (USD 26,400) that VW is readying for the European market in 2025. The maker of the Golf hatchback — which was knocked off its perch atop sales charts last year — said the EV will be as spacious as that model and as inexpensive as the Polo.

Aviation-focused hydrogen distribution and logistics network startup Universal Hydrogen announced that it has completed a test flight of a 40-passenger regional airliner using hydrogen fuel cell propulsion. According to the company, the test marked both the largest-ever hydrogen fuel cell powered airplane to fly, and largest airplane to cruise principally on hydrogen. The aviation industry has come under scrutiny as a significant source of GHG emissions, responsible for 2-3% of global emissions, with that figure potentially rising dramatically over the coming decades if no action is taken. While many initiatives are currently targeting rapid sector decarbonisation solutions, such as electrified propulsion or SAF, hydrogen is viewed by some in the industry as a more promising long-term solution, given its potential to be produced through carbon-free methods, and its energy attributes. Hurdles remain, however, to the implementation of hydrogen as an industry solution, including the need to significantly scale up clean hydrogen extraction capacity, and the deployment of distribution infrastructure.

Tesla has cut the prices of its most expensive models in the US for a second time this year, further unravelling earlier steep price increases that had contributed to a slump in demand in 2022. The starting price of the Model S has been reduced 5% to USD 89,990 while the cost of the lowest-priced Model X has come down 9% to USD 99,990, according to the company’s website. Tesla announced significant price increases for many of its vehicles in 2021 and 2022 in the face of parts shortages and long waiting lists, only to reverse course in January this year as weaker demand and rising competition ate into sales. The starting price of its Model X jumped from around USD 99,000 to more than USD 120,000 last year, helping to support Tesla’s industry-leading profit margins but contributing to disappointing new vehicle deliveries in the final months of 2022.

Britain’s FirstGroup will add another 117 electric buses to its fleet by next year after the public transport operator secured new funding as part of the country's move towards cleaner travel. FirstGroup, an operator of buses and rail in the United Kingdom, said its capital spending would increase to GBP 120 to 125 million in the full year 2024 as it plans to put in an additional GBP 35 million to expand the fleet and electrify the infrastructure, it said in a statement. The group was able to secure GBP 25 million of government co-funding in partnership with local authorities through the Zero Emission Bus Regional Area (ZEBRA) funding programme.

Tesla is planning to offer unlimited overnight home charging in Texas for USD 30 a month in a move that echoes the transformation in mobile-phone billing. While Tesla isn’t alone in contemplating such a plan, the automaker’s announcement during its investor day underscores a pivot in home charging. Power traders have long opined that electricity could become so cheap that profits will be driven more by selling the services rather than the megawatts themselves. That may be starting to happen now in Texas and mirrors a long-ago shift in the mobile-phone market, from specific numbers of minutes per month to unlimited plans.

BMW Group announced the launch of the BMW iX5 Hydrogen pilot vehicles, a fleet of demonstration cars powered by hydrogen fuel cells. The fleet will go into service this year, deployed internationally for demonstration and trial purposes. The launch of the pilot hydrogen fleet comes as BMW aims to reduce CO2 emissions per vehicle over the full lifecycle – including supply chain, production and product use – by at least 40% by 2030. While most of the company’s focus is on the transition to battery electric vehicles, with a plan for 50% of company-wide sales to be EVs by 2030, the company said that it views fuel cell electric vehicle (FCEV) technology as “a potential addition to the drive technology used by battery-electric vehicles.”

The United Nations used its first conference on water security in almost half a century to exhort governments to better manage one of humanity's shared resources. A quarter of the world's population relies on unsafe drinking water while half lacks basic sanitation, the UN said. Meanwhile, nearly three quarters of recent disasters have been related to water. "We are draining humanity's lifeblood through vampiric overconsumption and unsustainable use, and evaporating it through global heating," said UN Secretary General Antonio Guterres. Ensuring access to clean drinking water and sanitation is part of the 17-point to-do list the UN has set for sustainable development, alongside ending hunger and poverty, achieving gender equality, and taking action on climate change.

Ocean health company Running Tide announced an agreement with tech giant Microsoft for ocean-based carbon dioxide removal, using technology that accelerates the ocean’s ability to naturally remove CO2, and to permanently sink it to the deep ocean. Under the new agreement, Running Tide will remove 12,000 tons of carbon dioxide equivalent (C02e) on behalf of Microsoft. Launched in 2017, Running Tide designs and implements interventions that rebalance the carbon cycle, decarbonise global supply chains, restore marine ecosystems, and revitalise coastal communities. The company is designing and implementing an Ocean Carbon Removal system aimed at amplifying and verifying multiple natural carbon removal pathways. The company uses natural processes such as photosynthesis and ocean alkalinity enhancement to fix carbon from the fast carbon cycle, and utilises low energy mass transfer techniques to sink the carbon in the deep ocean for safe long-term storage in the slow carbon cycle.

UN treaty to protect oceans agreed after decades of talks. Countries around the world have agreed a historic deal to protect oceans that lie outside national boundaries after nearly two decades of on-off negotiations. The UN High Seas Treaty, which will aim to protect 30% of international waters by 2030, was agreed on 4 March in New York after a final two days of nonstop talks that centred around support for developing nations to meet the treaty’s commitments and debate about who will benefit from marine resources. More than 60 % of oceans are considered international waters, known as high seas, which means all countries have the right to ship, fish and do research there. Only about 1% of high seas are now protected. At stake in the agreement are lucrative fishing and shipping rights, as well as future proposals for deep sea mining and the harvesting of compounds from marine life that could have pharmaceutical applications. The treaty provides the tools to establish and manage marine protected areas, covers access to and use of marine genetic resources and sets out requirements for environmental assessments for deep sea activities.

New law raises the EU carbon sinks target for the land use and forestry sector, which should reduce greenhouse gases in the EU in 2030 by up to 57% compared to 1990. Parliament adopted with 479 votes to 97 and 43 abstentions the revision of the regulation on the land use, land use change and forestry sector (LULUCF) which seeks to improve natural carbon sinks to make the EU the first climate-neutral continent by 2050 and improve biodiversity in line with the European Green Deal. The EU 2030 target for net greenhouse gas (GHG) removals in the land, land use change and forestry sector will be set at 310 million tonnes CO2 equivalent, which is around 15% more than today. This new EU target should reduce the EU’s GHGs in 2030 further from 55% to around 57% compared to 1990-levels.

The Netherlands will be forced to choose between agriculture or building new homes and infrastructure if it is to meet its climate targets unless the farming sector cuts nitrogen-based emissions, the country’s nature minister has warned. In comments set to intensify the government’s dispute with farmers over emissions of the potent greenhouse gas, Christianne van der Wal said in an interview that the Netherlands could no longer build urgently needed infrastructure without cutting nitrogen-based emissions elsewhere, notably in the agriculture sector. “There will first have to be nitrogen cuts before there is room for new development such as new houses and sustainable energy investments. It is our economic lockdown,” she said. “My message is not the message [farmers] want to hear.” The Netherlands, one of the most densely populated countries in the world, has pledged to halve its nitrogen-based emissions by 2030. Agriculture accounts for 46 % of the country’s output of the potent greenhouse gas.